Barratt Developments Share Discussion Threads

[cockneyrebel] 13/5/2015 14:04

Taffee - have a look at the date when I started the thread below:



I'm no relentless bull. When the party is over I'll start a thread like that again. But rates don't start rising at all until growth here is much stronger and secured. And when it is stronger and secured we won't need low rates and property will rise off of that strength and people buying. 25 yr mortgages will become 30 and 35 year mortgages to make them affordable. Baby boomers will pop their clogs and their estates with very valuable houses will be sold and the kids will have their deposits - the cycle goes on.

That's until we start building lots of houses or inflation gets out of control.

That's when I'll be short.

All imo/dyor etc

[1gw] 13/5/2015 14:01

taffee - maybe I missed the point where you turned bullish on the housebuilders. I was under the impression you had been extremely bearish ever since (and probably before) your TW. post. The point (again) is that of course the market will eventually come to you, but since you've called it wrong for 5 years, why should anyone think you're calling it right today?

rwlly - I mean low in relation to house selling prices. At the time of taffee's 2010 call, he was right in the sense that the builders had acquired a lot of land at prices which gave them little chance of making a decent margin in the immediate future. But now, most of that land has been worked through and instead they have landbanks full of land bought over the last 6 years at much lower prices, relative to today's house selling prices. This is why their margins are relatively high and their price-to-book ratios look high - their "book" value is based on land bought when the market was much lower. Now nearly every conference call I listen to from the builders comments on how there is relatively little competitive pressure on land-buying so that they are able to buy land which meets their return criteria. If this continues, then they should be able to increase volumes, margins will dip a little and price-to-book ratios may also come down to more "normal" levels.

In my opinion. Please do your own research.

[rwlly] 13/5/2015 13:53

1gw what do you call low land prices.

[taffee] 13/5/2015 13:43

Wow...if I were sad enough to go through posts posted by people here it would be
Easy to find selective predictions that were wrong..Including yours....the only
Reason property hasn't.crashed is hmg props...near zero rates were supposed to be.an
Emergency policy no-one at the time thought they would still be here along with
Help to buy....it's total madness...in 2010 expectation is rates would rise considerably to stop inflation

[1gw] 13/5/2015 12:19

which brings us back to your tw. post of 5 years ago taffee. You were calling the top then. We've now got low land prices feeding through to the housebuilders' margins, volumes growing, a new majority tory government in apparently keen to press on with what should be favourable policies for the housebuilders. The BoE inflation report today was pretty benign. Barratt said on the call there was "no discernible general election effect" i.e. no slowdown that they could see before the election. Why shouldn't this "sweet spot" for the housebuilders continue for another year or two?


taffee 25 Oct'10 - 09:06 - 4678 of 15343 0 0
slim prospect?.....uk housing bubble is bursting and could fall 50%...tw land bank is based on lunatic prices therefore the tw business model is potentially buist

[taffee] 13/5/2015 11:48

Yes it's now 30% higher market cap than its 2007/2008 peak in the midst of a housing bubble on top of the previous housing bubble supported by hmg props...what could go.wrong?

[cockneyrebel] 13/5/2015 10:58

New all time highs being hit taffee.

CR

[cockneyrebel] 13/5/2015 10:35

taffee - there's an old saying 'the market can stay irrational longer than you can stay solvent'.

BDEV are going to pay back £400m in special divi's over the next 3 years - £100m this year.

After today's statement the 50p+ eps forecast for next year looks like being way too cautious imo 55p+ looks easily on the cards imo. So you're probably buying a fwd PE here of 10 or lest and you're getting about 6% of your investment back over 3 years, over and above the standard yield, with scope for that to rise.

I've seen bubble valuations and while builders are not 'cheap' on an historical basis, they have traded at much higher valuation in the mid 2000's and can't be described as 'expensive here imo, let alone bubble valuations imo.

And even if you were right now, after being wrong since August - BDEV would need to fall 40% for anyone ignoring your 'advice' to be out of pocket.

You'll be right eventually but then I forecast we're all going to die and I'll be right eventually too.

All imo

CR

[rwlly] 13/5/2015 10:29

shutittrev, THE Only reason Taffee got it wrong up to now has been government interference House builders needed rescuing just like the banks needed rescuing, but instead of giving them money directly they have had it through the back door.When the last downturn happened builders were sitting on millions of pounds worth of overpriced land, which without help would have bankrupted many of them, But they have not learned by their mistakes.They are doing the same thing again which will make them very vulnerable to the next downturn.

[1gw] 13/5/2015 10:22

Well, that's a great start to the day. Now a deep breath and cross my fingers that the BoE don't spoil it with the inflation report...

[taffee] 13/5/2015 09:36

Well I'm not wrong we have £1.5 trillion debt £90 billion deficit and a property
And stocks bubble.....even the bulls know that...it's when not if it pops..then we
Will see how many 'investors' there are

[rwlly] 13/5/2015 09:34

Agree with most of your post CocneyRebel, But i think you will find that from current values property is more likely to fall rather than rise, the only thing that will change my view would be a damaging bout of inflation.

[shutittrev] 13/5/2015 09:30

Taffee.....you must be the most inept investor since records began....totally useless mate.....you have called this completely wrong. Before you give the usual weak reply 'argue the point not the person etc'......the point is you have called this wrongly and if I and others had listened to your useless drivel, you would have cost myself and my kids money. You should be ashamed of yourself.

[cockneyrebel] 13/5/2015 09:24

rwlly - half the young that want to buy a house only want to buy it because it will go up in value!

If house prices started to fall you'd suddenly see far less buyers about - why's that? It's because for many it isn't about a home, it's about increasing their wealth.

If it's about a home the price doesn't matter when you buy if you like the place and can afford it.

Until that changes and houses are bought exclusively for homes and not for making money then things will remain the same.

Buy to Let's are buying to make money too. If people rent rather than buy they increase rents and encourage buy to letting - so that increases house buying!

There's only one cure - lots more houses and you'll only get that if there's a big easing of planning laws and encouragement to build for small builders - like tax reductions on the sale of the first 10 houses they build. It takes intelligent MP's to achieve that tho and the fact is you don't become an MP if you're intelligent - you run your own business instead imo.

All imo

CR

[rwlly] 13/5/2015 09:11

Not putting my head in the sand, I just think that the older generation that have had wealth given to them through the exessive rise in property prices and yes they are mostly conservatives, are being a shade selfish to the younger generation.Also hillbrown the city boys are like a herd of cows if one goes they all do.

[taffee] 13/5/2015 09:04

they said the same things in the dotcom boom...bulls think we are off to the races
Yet we appear to be hurtling toward the biggest financial crisis in our history
Fuelled by our own lunatic policies just like the U.S..did via Freddie.mac.and fannie Mae....amazing to think we are actively doing the same things

[cockneyrebel] 13/5/2015 08:41

Through the recent closing highs

CR

[cockneyrebel] 13/5/2015 08:41

LoL - 0.5% interest rates are 'help to buy' - we've had them for about 7 years!

How long are you going to wait for Help to Buy to end? And when it does end it will be cos we don't need help to buy anymore.

All imo

CR

[rwlly] 13/5/2015 08:35

Spot on Taffee.

[taffee] 13/5/2015 08:31

29% of barratt sales I think are help to buy...lol..help to buy overpriced property! How is that
Helping ftbs?....history will look back at these policies with regret

[rwlly] 13/5/2015 08:15

Statement is bound to be strong selling houses at these inflated prices, if it were the opposite they would have no chance when conditions normalise.

[taffee] 13/5/2015 08:03

Take away all the props and it would be impressive...how long can these abnormal conditions continue?.....what happens if the property bubble bursts and prices fall

[alphabeta4] 13/5/2015 08:02

Imo these will be £8 within 18 months barring a Greece Euro exit (or an early Euro referendum exit decision). If you look at historic house price cycles it is still early on. The lack of supply remains the key and this isn't going to change any time soon.