Barratt Developments Share Discussion Threads

[microscope] 12/10/2022 20:21

Hello, so i see sunshine must be shorting here too. Recessions don't last that long. Looking at this myself, apparently yield massive.

Nice!

[sunshine today] 12/10/2022 20:13

Dream on.

I doubt if they had a single net reservation over the last two weeks.


The lenders require a good 12% off of the price of new properties before they will lend.

They don’t want the premium risk of a new home on their books.

[horndean eagle] 12/10/2022 20:09

Important part is they have said they will meet forecasts for this year. Their year end is June so obviously they have a lot tucked away. Another 70p of earnings. I think they can adjust during the period. Pent up demand won't go away. It will come back when rates have calmed down. Worth bearing in mind section 106 contributions will get re-negotiated if prices fall so there is actually a lot more slack re falling prices than is apparent. Obviously cutting down land buying will turn more of the tnav into cash. They have land creditors but will have worked their way through most of them by year end and they have said they expect cash of 800m by then. That is after dividend and the other 150m of buyback they have promised. Also worth bearing in mind they won't be facing much competition on land in due course and will be able to fill the hopper with really low priced deals. Self balancing mechanism which pays off during the next up cycle.

[sunshine today] 12/10/2022 19:11

You buy at the bottom of a recession / depression

5 - 7 years time

[divmad] 12/10/2022 19:02

All depends on how deep is this coming recession.

[difference] 12/10/2022 18:13

Always first sector to bounce in a bear market. I am not going to rush into it, but this company is now yielding over 10pc.... Won't be long now folks.... buyback too..... bad news priced in.....

Fasten seat belts.... may not need to brace brace when this lifts off.....

Shorters won't be around much longer

[ghhghh] 12/10/2022 16:38

But the share price already discounts all this.

We need to get through the 10 yr Gilt turmoil this week. Everything is being decimated, it’s not just house builders. Airlines, JET2 at 660p! Property companies trading at over 50% discount to NAV. Lots of companies trading at 7 year lows.

This is a full on bear market and typical for October. Hopefully sentiment will reverse going into November for the usual Xmas rally.

Markets are grossly oversold and overdue a bounce, even if a dead cat. Just need a bit of good inflation date or the Fed/BoE stating that not going to crash the economy, that they are now factoring in asset price falls into the forward curve….

[sikhthetech] 12/10/2022 15:23

That's a huge drop in reservations..


Trading update

In the period our net private reservations(2) per average week were 188 (FY22: 281) and net private reservations per active outlet per average week of 0.55 (FY22: 0.85; FY21: 0.87; FY20: 0.72). (Appendix 1).

The private reservation rate in the period reflects customer response to increased wider economic uncertainty, where growing cost of living concerns have been compounded by increased mortgage interest rates and reduced mortgage availability.


Plus H2B closes to new applications at end of this month, so further drop off in H2B activity going forward.


"In addition we have limited availability of homes for early occupation given the strength of our forward order book and we have also seen the expected reduction in Help to Buy activity, which accounted for 12% of private reservations in the period (FY22: 21%; FY21: 51%; FY20: 45%)."

[ghhghh] 12/10/2022 15:15

Trading on a PE of 3.5 and at 0.65 NAV. Has contracted forward sales of 64% to mid 2023.

Unlike Covid they have time to adjust business to lower volumes.

Lower volumes = less inflationary pressures which which help partly offset narrowing margins. It will also prop up prices.

The Media are obsessed with 2 year and 5 year fixed but everyone knows that only an idiot fixes at the top.

Buyers will still be lined up but like vultures, they will reckon that say 10% off the price more than compensates for higher short term interest rates. The bounce will be quick. The Media compare affordability to 10 - 30 years ago but nowadays it’s a different market, many new mortgages are funded by both partners. The stats don’t factor this in.

Job security obviously a big factor.

All boils down to how much bad news is now priced in. When house prices are perceived to have bottomed HB’s will re-rate to growth and PE’s of over 10 and premiums to NAV. The lower prices go, the greater the re-rating (ie PE/premium)

Hence Barratts could easily write off £1bn and shares re-rate upwards!

[sunshine today] 12/10/2022 15:14

1/3 and the last two weeks ????

[smurfy2001] 12/10/2022 15:06

New home reservations drop by a third at Barratt, as it warns of a 'less certain outlook' as rising mortgage rates and living costs hit the property market

[sikhthetech] 12/10/2022 15:02

There you go, HBs reporting slowing sales.
House prices falling.
More and more media reporting slowdown, housing market crash/slump.
as expected.

Says it all.


Demand for new-build homes cooling fast, says Barratt



Barratt reports slump in new home orders as mortgage rates rise
Shares slide after developer warns of ‘less certain’ outlook as housing market hit by jump in borrowing costs



Barratt Developments reports fall in private reservations as economic concerns bite

[porsche1945] 12/10/2022 14:28

There won’t be anymore buybacks or dividends you muppet, cash will now have to be preserved, do you have any idea how quickly it goes bad for builders once market turns, we are now in a new 7/8 year bear cycle for housing, Barratt will be raising capital before this is done.

[smurfy2001] 12/10/2022 13:30

Barratt Developments is seeing strains appearing in the UK property market as the cost-of-living crisis and soaring mortgage rates start to bite

[smurfy2001] 12/10/2022 12:59

Barratt reports slump in new home orders as mortgage rates rise




Barratt said the average weekly number of net private reservations of properties had fallen by a third to 188 between 1 July and 9 October, compared with 281 in the same period last year.

[gorse] 12/10/2022 10:49

Encouraginly, most of the £200mn share buyback has still to happen (I think only £39mn has gone through).

[smurfy2001] 12/10/2022 10:46

Still too expensive to buy given the eventual slow down of the housing market.

[sunshine today] 12/10/2022 09:34

Gill17

You buy builders at the bottom of a recession/ depression


NOT THE FIRST DAY ITS ANNOUNCED

[gill17] 12/10/2022 09:30

I've added at 315 and if it falls lower I will add more. There will be a house price correction of perhaps 10% but I believe in the strength of this Company. Its a long term hold.

[sunshine today] 12/10/2022 09:07

Land is now worthless.

At under 20% of the sales value it’s the only place to reduce the cost base.

Building houses is an extremely expensive process

20% off house prices and this company is in dire straits

Might take 10 - 12 years to wash through

[gaygay3] 12/10/2022 08:50

Why is it a horrible mistake these and TW will bounce back at some point all ways do if you don’t need the money keep for long term never fails

[unastubbs] 12/10/2022 08:40

I'm assuming the dividend (the reason I bought these in the first place) will be halved. Despite the cash they hold, it will be prudent to preserve as much as possible. There will also be the thought of buying land on the cheap some time if opportunities present. Horrible mistake on my part buying these (and TW). I will hold on though.

[dodge meister] 12/10/2022 08:37

Buy back maintained just showed how good their capital position is. This market is broke at the moment.

[wskill] 12/10/2022 08:10

Good for the buyback though .

[davethehorse] 12/10/2022 08:09

Oh dear down 10%+ today...?