Persimmon Share Discussion Threads

[sikhthetech] 29/6/2022 15:05

I haven't changed my story...lol I've been consistent throughout...

[spectoacc] 29/6/2022 15:04

You've completely changed your story, but at least we can stop having this debate.

[sikhthetech] 29/6/2022 15:00

SpecAcc/ymaheru,

My comment: There were properties which fell over 20%, some 40-50% during GFC. My comments have been consistent.

"When house prices crash, the asking price sees the biggest falls, as buyers ask for bigger discounts.

New Builds normally command a significant premium(can be 25-30%) over similar existing builds. That premium difference would reduce when house prices fall, so they too should see a bigger fall than the avg existing build.

House prices do not fall at the same rate across the country."


This was my original post from 2007 (reposted today on the general thread):

sikhthetech - 10 Jun 2007 - 22:46:10 - 5509 of 51679 PACE: PIC a winner for HDTV,
Gbh, interest rates..think they will continue rising, approx 1-1.5% before peak....my concern is more than house prices will crash upto 40%, from peak to trough, depending on where you live...
all imo, dyor

[ymaheru] 29/6/2022 14:54

GFC was 20% crash peak times trough:
hxxps://pdf.euro.savills.co.uk/uk/residential---other/spotlight---the-global-financial-crisis---10-years-on.pdf

If interest rates stay higher than 2009, then I could see things being worse, but I think interest rates will be slashed in a recession.

Also, the amount of interest only mortgages carries on declining, down 69% on 2012 (which was lower than 2007). That should mean people have some headroom compared to 2007.

So, 40% crash seems unlikely, but 1500p much more likely.

[spectoacc] 29/6/2022 14:53

No, house prices are not going to fall 40%. That's house prices, not an individual house, not a small subset.

[sikhthetech] 29/6/2022 14:49

SpecAcc

They're not going to go down 40% except in very limited circumstance as you've now stated.

I stated the same previously...my comments on the falls haven't changed.


sikhthetech - 03 Mar 2022 - 14:53:42 - 2547 of 2827 PERSIMMON PLC - THE CHARTS
Avg house prices.

Rightmove £341,019 - Jan 2022



Halifax £276,759 - Jan 2022.



TW £332k - for end 2021.

PSM £330,000 - for end 2021.

RDW £417,000 - for end 2021.


When house prices crash, the asking price sees the biggest falls, as buyers ask for bigger discounts.

New Builds normally command a significant premium(can be 25-30%) over similar existing builds. That premium difference would reduce when house prices fall, so they too should see a bigger fall than the avg existing build.


House prices do not fall at the same rate across the country.

When the housing market crashes, no HB is immune from the crash. Likewise, listed HBs are not immune from stockmarket falls or movements.


Govn support, provided during pandemic, has ended. Repossessions which were stopped during pandemic are legal again.
Around 30k homeowners in severe mortgage debt.
Inflationary pressure, interest rate rises, NI rises, Council tax rises, energy price rises all impact affordability.

[spectoacc] 29/6/2022 14:38

Affordability is always a major problem.

There's headwinds for house prices, without a doubt - I see them falling in real terms, possibly for some time.

They're not going to go down 40% except in very limited circumstances, as you've now stated.

Consider that the GFC, the bankruptcy/de facto bankruptcy of all the major lenders, a total freezing of interbank lending, unemployment, recession, and a stock market crash only sent them down 15%, and for a single year. A big fall, if you bought on a 110% mortgage, or even with a 10% deposit/90% mortgage.

House prices aren't going to fall 40%. Not then, not now. End of.


(Thanks @EI).

[sikhthetech] 29/6/2022 14:29

SpectoAcc,

There were property prices which fell > 20% during GFC. I saw some sell for 40-50% less.. During a slump, it can take months or longer to sell and all too often sellers keep reducing prices or buyers make speculative low offers..


Graduates, would be saving up for a deposit as ftb. They would have less money to pay towards a deposit.

Gov support - The point is the huge govn support during covid ended in Sept 2021. H2B is ending early this autumn.

They may come up with some other scheme but I can't see it stopping a housing price crash as affordability is a major problem at the moment.

[essentialinvestor] 29/6/2022 14:26

Spec, sik is an immovable object when it comes to his UK house price forecasts.

He may move the goalposts but his faith remains devout.

[spectoacc] 29/6/2022 14:17

Even in the GFC, c.15%. Or are you talking eg London newbuild flats or something?


Govnt support - can you see that policy changing? I can't.

It isn't current graduates who are FTBs.


Edit - if you've been predicting 40% falls since Feb, you've been basically wrong.

[sikhthetech] 29/6/2022 14:13

Whilst experts in 2006 were predicting no house price crash, I was predicting 40% crash... As is the case now, the BoE were too slow to raise interest rates to control inflation back then..


My current belief re govn support ending and house prices - So based on my post re govn support, I'm calling April 2022 as top or close to top of house prices...



sikhthetech20 Feb '22 - 15:26 - 5884 of 5899 Edit
<...>

When the housing market crashes, no HB is immune from the crash. Likewise, listed HBs are not immune from stockmarket falls or movements.

Govn support, provided during pandemic, has ended. Repossessions which were stopped during pandemic are legal again.
Around 30k homeowners in severe mortgage debt.
Inflationary pressure, interest rate rises, NI rises, Council tax rises, energy price rises all impact affordability.

[sikhthetech] 29/6/2022 14:11

SpectoAcc

Govn support has only delayed the inevitable crash and if anything made things worse..40% happened in the previous crash and I believe it will happen again. Peak to trough and not in all areas/streets. Asking prices fall the most and as new builds usually command a premium that premium will reduce substantially or disappear..


Currently, graduates, who are the current ftb, needed to support the housing chain, will be paying over 7% interest on their student loans.. these loans run into tens of thousands.

Help to Buy. Those who took out H2B where the initial 5yrs has completed will be paying 11-12% interest on the equity loan (upto 20% or 40% in London). Given it's an equity loan, the capital would have increased in line with the property price.



"in my favourite haunt of the North East, house prices in some areas are yet to regain 2007 levels"

Well there you go...prices can take years to recover... homeowners in negative equity..

[spectoacc] 29/6/2022 14:05

There's always mortgage frauds & "special" areas & special situations (eg half burnt down, or repo'd to auction) & running-down leases to strip out, but I recommend a scroll through this:



Shildon may be familiar to some for its train heritage. A short way down page 1 is the unfortunately named 13, Primitive Street.

May 2001 - £31.5k
Oct 2003 - £31k
June 2013 - £33k
Jan 2022 - £32k.

Forget real-terms - even forget nominal. Think what each buyer has lost in agents fees and legals, before even getting to upkeep.

Plenty more around. Further up the list is 41, Jubilee Crescent - £79k in Nov 2009 (post-crash), £62.5k in March this year.

Or 27, King Edward Street - £60k in 2009, £64k in 2013, £55k in 2021.

There's winners too, but adjusting most of those for inflation and housing no longer looks either a one-way bet, nor a bubble.

[spectoacc] 29/6/2022 14:00

Yes, but. Who saw the GFC coming? Or rather, who foresaw that all the major lending banks would effectively go bust?

Northern Rock (gone), Bradford & Bingley (gone), Alliance & Leicester (rescued by the Spanish), HBOS (rescued by, and in the process almost destroyed, Lloyds).

Went from 110% mortgages, to no mortgages at almost any interest rate. Carnage. Very different to now, as well as very different to the even worse early 90's, where it took a decade in some cases just to get back to where we'd been.

You say it depends how long the housebuilders' cash will last, but no - they have huge cashflow, they'll simply hold off on land purchases. They also have big land banks. In PSN's case, they also control their supply chain. PSN could ride out anything short of Putin invading.

40% falls are a nonsense IMO. Small nominal falls - definitely possible - larger real-terms fall - highly likely, & barely noticed by most. 40% off nominal - I'd go as far as to say no chance.

1300p-1500p PSN? Yes, more than possible, the upper end is only a few quid off where it is now. Several orders of magnitude more likely than -40% house prices.

(Incidentally, in my favourite haunt of the North East, prices in some areas are yet to regain 2007 levels - even nominally).

[sikhthetech] 29/6/2022 13:45

ymaheru

There were similar comments in 2006 by experts re housing market won't crash, whilst I was predicting 40% house price crash...

Similar situation except HBs have cash cushion..

Regardless of the amount of cash or land, the key here is how long will a slump last...The longer it goes on the more the cash will dwindle and land prices fall..



Dec 2006:
Savills says housing market is not about to crash..
Prices high due to inadequate supply rather than a bubble.

Sound familiar..;-)

The rest is history, so to speak.... so lack of supply wouldn't stop a housing market crash..
watch the supply increase and the demand decrease...

"The housing market is not about to crash, according to the latest Savills UK Residential Research Bulletin. Low growth in 2005 seems to have constituted the full extent of the housing market slowdown, with house price inflation excelling in 2006."

"Price levels are high and large, growing numbers of households are unable to buy their homes but this is due to inadequate supply rather than a speculative bubble,â€&trade; said Ms Barnes."

[ymaheru] 29/6/2022 12:48

Sikhthetech might not be so crazy.

In the 80’s, we had high inflation, and builders didn’t fare so well.

He’s only claiming PSN will drop 50-60% from peak.
BDEV fell 75% in late 80’s.

The companies are much better capitalised now, and new home sales often do not fall as much as the wider housing market, so I wouldn’t expect a 75% fall this time. We’ve had PSN drop 40%, even with solid results. Pessimism could drag it lower, close to Sikhthetech predictions. I don’t know.

I’m keeping one foot in and one foot out, and might sell if it rises a little, because I see volatility ahead.

[sikhthetech] 29/6/2022 12:27

SpectoAcc,

Agree the situation is different this time re debt...

HBs seem to have enough cash for now and how long it lasts will ultimately depend on how long a slump lasts. Costs will remain during a slump so cash will dwindle...The value of land will also reduce.


I'm still looking at 1300-1500p. At that point I'll look at what is likely to happen in the housing market before considering whether to buy..

[spectoacc] 29/6/2022 12:19

It won't stop a house price crash from potentially happening, no, of course not.

Nor could lower house prices stop housebuilding co's earnings tanking.

But if you were here for 2008, you'll know the GFC was existential for the housebuilders - TW a penny share etc - because there was a real chance of the debt dragging several of them to zero. Persimmon, for one.

That simply won't happen this time.

Again, if your (repeated) thesis is a house price crash, then certainly, shares can go lower.

Mine is that shares have already gone much, much lower. Is no good the IC forming a judgement based on where they were - it's where they're at now, and what the market sees in the future.

Logically, housing has bubbled with every other asset during ZIRP, so why shouldn't it fall heavily with every other asset class too? But what the doomsters are missing IMO is inflation - RPI over 11%, housing might do say 5% - that's a 6% real-terms loss this year.

But it isn't a crash. To fall "30-40%" requires all those currently desperate to get on the ladder to have bought (or become unable to buy, eg mass unemployment), for repo's to be happening everywhere (yet far more rates are fixed now than in the 90's, as well as rates being far lower and currently historically hugely negative), for supply to come through.

Anything's possible - as I say, I think housing's going to fall fast in real terms, but barely at all in nominal - but it's what's in the price, and where the risk/reward lies.

Ironically, the more a disaster scenario plays out - high inflation, high interest rates, deep recession, mass unemployment - the more chance of rate cuts and stoking the next boom.

I think the s/p's of co's with real assets and net cash like the housebuilders will prove more resilient than many think. Not least because there's such a stock of buyers out there, and wages are going to be strongly on the up.

Doorstep delivery co's on the other hand, I'd be short them :_)

[sikhthetech] 29/6/2022 12:09

SpectoAcc

"Lack of debt the main difference - housebuilder shares falling an average 90% in the GFC, but only Redrow having any net debt this time."

No debt will only help them through any crash.. It won't stop a crash from happening..

Currently, the general perception is that there's not going to be a crash so HBs prices have fallen on that expectation.

I believe there is going to be a big crash, 30-40%, peak to trough. Asking prices falling the largest amount. Not all areas/streets will see the same amount of crash.

The more it's reported re a crash, the further the HBs share price will fall.

Long way to go..

[sikhthetech] 29/6/2022 11:59

Beckers,

Well it wasn't me who had downticked you, it's just you trying to sway posters to suit your agenda....

And just to prove that you were manipulating and BS, I've now downticked your post, so you've got 2 downticks.. ONE from me...I wonder which one of your 'mates' downticks to sway and manipulate posters...
lol


SpectoAcc,
It wasn't me who downticked you, it's just the troll and loser Beckers trying to sway you...

[beckers2008] 29/6/2022 11:09

SpectoAcc,

Looks like I got down ticked!

Could it be that 'Sick' mug punter that doesn't know the difference between the BOE base rate and the bank to bank lending rate, what an idiot, lol, just lol!

[beckers2008] 29/6/2022 11:00

SpectoAcc,

Looks like you down ticked again!

Could it be that 'Sick' mug punter that doesn't know the difference between the BOE base rate and the bank to bank lending rate, what an idiot, lol, just lol!

[spectoacc] 29/6/2022 09:48

I've my very own 30-handled troll so am used to down-ticks (tho he only pays an ADVFN sub for one of them - note only those in blue may be able to downtick).

Looks like the IC article isn't behind the paywall - the table is the interesting part:

[beckers2008] 29/6/2022 09:42

Spectacular,

Likwise, I can't believe you have been voted down on providing some research on the HB sector!

Could it be that 'Sick' mug punter that doesn't know the difference between the BOE base rate and the bank to bank lending rate, what an idiot, lol, just lol!

[spectoacc] 27/6/2022 09:08

Some comment in the IC on Friday, the bigger article comparing the housebuilders now with how they were in 2007. Lack of debt the main difference - housebuilder shares falling an average 90% in the GFC, but only Redrow having any net debt this time.

"Falls may only just be starting" - something I'm more than happy to be long against, when PSN already down from £32+, & even the article acknowlegding -90% isn't going to happen this time.

Deep value having a dcb this morning, PSN not alone.