Housebuilding Sector (Property)

[Guest tk20]

Housebuilders and construction have had a fantastic 12 months, beating all sectors. Highlights are new FTSE 100 entrants and 250 risers, special dividends, cash surpluses, margins 20%+, high forecasted dividend returns and a chronic over-demand-under-supplied market.

 

With many books already pre-sold and 2016 order books filling up very quickly, how much upside do you think there still is in the industry given the forward certainty and fundementals?

[Guest FoxTrader]

I think the upside will prevail throughout the year ahead. There is no indication, fundemental or analytic, that proves the opposite - very lucrative market indeed, I would say....

[FiringSquad13]

You also have to consider the measures introduced by the government to increase new home builds. Also relaxed planning laws. I would expect this would continue to boost the sector.

[Guest Condor]

I've held Persimmon since 2008 and bought into the dips including getting some as low as 400p.  Although I've reduced my holding at higher levels in recent years the income and special returns from this share mean I've kept in my SIPP and will not be selling this year or maybe even next.  Buying in now is a trickier call, probably depends on motives.

[Mercury]

Interesting area, which I have too much bias on to trade in.  Massive bull run in line with the rest of the market since 2009 but also fueled (in the UK at least) by government and BoE policy and, in London, foreign buyers using new build as a safety deposit box (not even letting out their properties in many cases!).

 

There have been many articles on why property will never fall in value, which is enough for me to think it will.  Recently some negative ones have crept in but there are 4 (maybe more if I think about it) factors that I believe will govern what happens next:

1. Prices are totally out of kilter with incomes - people can't afford to buy
2. Cheap money has driven the market - remember 2008 in the US???
3. There is a massive impending mismatch between supply and demand for new builds (especially in prime locations at high value) as house builders swarmed into the market
4. The politics has changed - there are more voters who want to buy but can't now than home owners to protect and even many of the latter want prices to fall so their kids can leave home...  Government policy has targeted this market in the past few years and this will get worse for house builders, foreign owners and the buy-to-let crowd

It may not happen soon, property will probably be the last asset class to fall but fall it will and hard.  given the performance so far it is hard to justify not cashing in and there is now case for investing now I feel.  Put another way, if I won the lottery I still would buy a property yet!

 

For the record, I use to own property but now rent and am awaiting the best opportunity to buy my long term home for 20 years to emerge...

[Mercury]

HI Condor,

 

This quote I picked up today may interest you and anyone else invested in or trading property sector.

 

"Developers in central London are offering institutional investors discounts of as much as 20 percent on bulk purchases of luxury apartments as demand from international buyers slumps amid higher taxes and low commodity prices"

 

-Bloomberg

 

Interested in people's views on the property market in general and how they are playing it.

[Mercury]

Apparently Barclays have launched a zero deposit mortgage.  The last time we saw those was before the late 80s crash...  The potential for negative equity is mind numbing!

[Guest Condor]

the tea leaves are speaking to us...

 

[will3]

 

I think we are heading for a 15-20% correction.  Wondering what I can use to hedge this.  I have been searching for a product tracking Nationwide UK property index, or an ETF which might do the same but can't find anything exact.  Any ideas?

 

Cheers

Will

[Caseynotes]

Hi .  A couple of old but interesting articles on this subject and describes an instrument IG used to have for the purpose and the problems they ran into with it. The suggestion at bottom of the Moneyweek piece seems reasonable.

 

http://www.telegraph.co.uk/finance/personalfinance/2900195/Can-you-profit-from-the-house-price-falls.html

 

http://moneyweek.com/the-best-way-to-spread-bet-on-uk-property-prices-11820/

 

 

 

  

[will3]

thanks very much  

yeah seems they don't have that instrument anymore which is a shame (well assuming i'm right anyway!)

fair point on betting on individual companies, but then you are taking on a load of other risks too!