UK house prices

[chump]

Major housebuilder just made public statement that they will be reining back the number of builds for the remainder of the year..be interesting to know how many others are following suit but keeping quiet about it (supplyside)...as I previously pointed out these companies will be in no hurry to keep on pumping out units unless the numbers make sense...today they have a better ability to do something like this..since the 80's the labour side of construction has moved virtually to all sub contract with very few companies running sizeable payrolls and that means the labour side of the cost structure is much more amenable to be adapted to market change...

Note also that in the late 80's/early 90's..back then rate changes were coming without any real predictability and indeed were happening in whole numbers..this time the whole issue seems more stage managed to give all parties involved a more long distanced view of what to expect and thus adapt....I just don't 'smell' the same degree of panic at the moment..doesn't of course mean we won't at some point ,but at the moment I think it would need some type of catalyst...a third term for labour might qualify ?

 

[JTrader]

"a third term for labour might qualify ?"

Please don't do it to us!

 

[JTrader]

Hi chump

are housebuilders better off building and selling houses when prices are high like now, and getting as many houses built and sold for as much as possible during such periods? rather than building and selling when prices are at a low? What would be their outlook on this as to where their best interests are served?

Thanks.

 

[chump]

Jt,
Not that simple..it's also a question of costs..clearly if they are able to sell an increasing number of units and the higher addtional pricing is greater than any addtional costs they have in building then they will seek to build those units because it will add to their bottomline..however if they are under pressure on pricing and they keep building then they will not see the same bottomline..that in itself might not dissuade them ,but taken together with the issue of limited land banks with PP it might..in that position would you not look to smooth your equity curve by cutting back numbers to retain units for future sale when pricing pressure may have eased? Historically ,one of the problems with doing that would have been the size of the labour force and how to achieve such a strategy without causing major labour problems. However , with labour now mostly sub contract that is now not the issue that it once was.

 

[JTrader]

Thanks chump

so are you hinting that it may it be a case of such housebuilders foreseeing a possible pending cooling in house prices and demand pressure, meaning that their bottom line profit could end up being lower than they would wish or lower than it would be under market conditions that are optimal to them?

 

[chump]

JT,
Housebuilders generally have had a good cycle in recent times and I can't believe they are naive enough to think that conditions that have applied will continue to apply so what I am saying is I expect to see them building fewer units here in the UK...be interesting to see the stats when they become available...

 

[TheBramble]

US 'August Housing Starts' figure released yesterday - Housing starts rose 0.6 percent to a 2 million annual rate.

Canada - Canada's housing starts came roaring back with a vengeance in August, soaring 11 per cent from the previous month.

Anyone have the UK's...?

 

[chump]

http://www.odpm.gov.uk/pns/DisplayPN.cgi?pn_id=2004_0198

Next couple of quarters will be interesting...

 

[TGM]

One thing I envy about you Brits, you can bet on housing prices. In the states you can only buy the physicals! No spread betting!

 

[TheBramble]

http://www.odpm.gov.uk/pns/DisplayPN.cgi?pn_id=2004_0198

Next couple of quarters will be interesting...

In England during the quarter to June 2004, there were 46.9 thousand housing starts and 38.7 thousand completions; starts and completions were up 10 per cent on the same period in 2003.

During the twelve months to the end of June 2004 starts numbered 165.4 thousand (up 7 per cent on the previous twelve month period) and completions totalled 146.8 thousand (up 6 per cent).

London and the South East saw continuing upward trends.

Come on Chump - see, it's all looking Rosy! Join us! Jump in! Increase your property portfolio now... Buy my house!! PLEASE!!!!

 

[cj12]

The market always looks its best at the top.

CJ

 

[TheBramble]

The market always looks its best at the top.

Very possibly. But we wont know where that was until after we've been there.

In my experience, very few call it before or at the top - most claim to have, after the event.

Some say the slides already started. London prices apparently have been falling for 18 months. Some say when the buy-to-let crowd gets to 9% they'll bale out. Maybe. And are they that big an influence? Don't think so.

The fact is, most people will be swayed by what's headlining in the press on on the news.

Interest rates are rising and that's never good news for property prices. True. But are we at the top yet? Don't think so.

Demand may be falling off but a slump will need a bad Winter and another 0.5 % on the base rate.

 

[chump]

Property is not much different to stocks in SOME ways...the time to sell is when you don't have to overly sweat whether there is someone waiting to buy....trader333 as it down...know what you want based on observation of the market,achieve it and get out.....even if it did go further was it really worth the accompanying 'stress' of will it..won't it sell / fill?

Yes Tony...a deal to be done..were you the 40% +

Cheers

 

[TheBramble]

Yes Tony...a deal to be done..were you the 40% +

Now Chump - you know I didn't vote. I'm a trader. Going for less than offer would cause internal hemorrhaging.

 

[JTrader]

"In England during the quarter to June 2004, there were 46.9 thousand housing starts and 38.7 thousand completions; starts and completions were up 10 per cent on the same period in 2003."

Sorry to get back to basics, but what exactly are starts and completions? - new houses in the process of being built and completed sales of new houses? whatever they are - 38.7 thousand (38700) doesn't sound that many........

Thanks

jtrader.

 

[chump]

JT,
The number itself has no significance..the significance comes from context...what is that number relative to what it has been in prior periods and what is that number in relation to known long term demand for housing..

If these numbers were to keep on increasing in the face of a market slowdown then you can infer that if you are in the market to buy you will probably be in a good position to obtain a very favourable deal. If we start to see these numbers drop off markedly...well what do you think
Cheers

PS As an aside remember builders are no different to any other company..they will be keen to try and make their number look better just prior to the end of reporting periods so a bit of research and patience could be very worthwhile.

 

[Jacketspud]

I actually work in the housing market as a lawyer and cannot see that house prices are going to go down a great deal. From my own knowledge prices will now stabilise. When I bought my first house in 1999 i paid £44500 - when i sold it 4 years later i sold it for £100,000 - so my house had more than doubled in price. But in a further 4 years time the house which i sold would not double again to £200000+as there is no way a two bedroom terrace would cost that where i live. The house price rises have just been unstainable, which is why things are now starting to slow down as incomes are not rising in line with house prices. Prices will rise at a more reasonable rate of between 1-5% a year rather than the 15%+ per year they have been rising at.

Well thats my theory any way.....

 

[Jacketspud]

With regard to house builders - now prices are starting to stabilise they will probably begin to increase the number of units they produce to keep up their profits, as when the market takes a down turn they tend to have to offer more incentives to sell properties ie by offering to pay deposits, stamp duty and legal fees.

 

[TheBramble]

The number itself has no significance..the significance comes from context...what is that number relative to what it has been in prior periods and what is that number in relation to known long term demand for housing..

Very true. It's the 5-age +/- that's the real indicator.

If these numbers were to keep on increasing in the face of a market slowdown.

These numbers ARE the market are they not? If not, what exactly is it that would be doing the slowing down?

 

[TheBramble]

I actually work in the housing market as a lawyer and cannot see that house prices are going to go down a great deal. From my own knowledge prices will now stabilise.

Are you basing that on the value of properties selling now compared to similar properties/areas in previous periods or on some other factor?

Plus your location (York and Leeds for that matter) is one of the highest growth property price areas in the UK. Are you speaking just from that geographical perspective or are you quoting a more national source of data?