As an aside of yesterday's post, I notice that today Barratt and Redrow have fallen another 16 and 9 percent respectively so far this morning. I don't claim anyone reacted on the basis of my post, as really you should be checking the figures and anybody can see where the UK economy is headed.
I just wish I'd been doing a bit of spreadbetting on the prices falling still further. At 76p, how much further can Barratt fall? The answer could be zero? Is there some major bad news in the offing?
Wednesday 11 June 2008
Tuesday 10 June 2008
UK Property Price falls
Funny how most of the City fund managers right now have turned "contrarian", and mostly seem to be calling the bottom for housebuilding stocks such as Barratts and Redrow right now. Even stranger still, since you'd expect them to be investing in these stocks, why do the daily prices continue to fall so much? Or are they waiting for others to take the bait first?
In my opinion, these share price drops indicate that reported earnings are going to fall through the floor, possibly coupled with asset value writedowns, as various sites, mainly brownfield have their planned developments deferred. I'm currently staying in a 1-bed flat near Bristol while I work short-term there, and out of my block of 4, 2 are completely empty, and one is up for sale, although at £180,000, reality obviously will take some years to settle in in the second-hand market. How long before the likes of Barratt and Redrow have to do 50% off deals (or buy-one-get-one-free?), simply to shift their current stock of city apartments?
Given the number of years reality may take a long time to set in to the mindset of Joe Public. My guess is 2017 might be the year I'll take the plunge on UK property again. Alternatively, the government might manage to stave off a crash, but if so, don't be surprised if your £180,000 is still worth £180,000, but a loaf of bread costs £50.
If that happens, you'll be wishing you'd invested in Gold and Silver instead!
In my opinion, these share price drops indicate that reported earnings are going to fall through the floor, possibly coupled with asset value writedowns, as various sites, mainly brownfield have their planned developments deferred. I'm currently staying in a 1-bed flat near Bristol while I work short-term there, and out of my block of 4, 2 are completely empty, and one is up for sale, although at £180,000, reality obviously will take some years to settle in in the second-hand market. How long before the likes of Barratt and Redrow have to do 50% off deals (or buy-one-get-one-free?), simply to shift their current stock of city apartments?
Given the number of years reality may take a long time to set in to the mindset of Joe Public. My guess is 2017 might be the year I'll take the plunge on UK property again. Alternatively, the government might manage to stave off a crash, but if so, don't be surprised if your £180,000 is still worth £180,000, but a loaf of bread costs £50.
If that happens, you'll be wishing you'd invested in Gold and Silver instead!
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