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Sorry hope SP stays low until I have invested my dividend in November
Totally agree onfire
Looking at PSN and others, average today -4.65%
Bdev yesterday £370.7 minus div, minus 4.65%
=£3.29
May as well bang it in the bank and get 5% div come bonfire night. Deflated!
Have a good day all
Easy way to remember this is replace the word EX with the word NO
thanks for the reply, I thought as much, people pulling there money after getting the dividend.
You had to be in yesterday. It's ex div now hence the drop.
Lee That question has been asked a lot of time but no one gives a simple answer
do you have to own shares by the end of today to get the dividend or did you have to be in yesterday?
At least there is some good news ,
Gary,
I thought I'd start a new thread ~ if only to get my name off the heading..! :-)
As you know, while this is a Barratt share chat, Bellway is my team currently, and this is the company my comments below refer to...
Lots of talk, understandably, here and pretty much everywhere else about house prices...
But it's surely not house prices that directly concern those of us commenting here ~ is it..?
I mean, what matters to us is surely how the house builders themselves do through this...?
And, just for a change, I have some specific numbers for that.
For the 1989 onwards house price slump, Bellway made returns on equity of:
1989 23.5%
1990 10.5%
1991 7.2%
1992 8.3%
1993 20.0%.
So, they had three underperforming years during which they averaged 8.6% ROE which is about half of their long term average of around 16%.
But they kept increasing the dividend throughout ~ albeit somewhat incrementally ~ such that it crept up from 5.0p in 1989 to 5.5p in 1992.
Speaking personally, if whatever sh.tstorm we're currently going through has an equivalent impact to that, I feel I can comfortably live with that...
The credit crunch ~ the other time of significant house price falls since 1952 ~ was somewhat tougher on Bellway.
Their ROEs were:
2007 19.8%
2008 (0.9%) minus
2009 (2.5%) minus
2010 3.1%
2011 5.2%
2002 7.3%
2004 11.6%
2014 15.7%
So that's an average ROE of around 4% for the underperforming period ~ i.e. a quarter of their long term average ~ and for seven years, so somewhat more painful, and the drop in dividend before full recovery was the loss of 3.5 years' income in that it went from 43.1p in 2007 down to 9.0p by 2009 to have then subsequently fully recovered by 2014, now on 52p.
So, if that's what we now have to weather once more, it requires 3.5 years current dividends in back up funds to compensate for the dividend loss.
If what we're currently in, or going further into, is worse than that, then obviously there's the potential for more pain on top.
Bellway's balance sheet is currently in great shape ~ but then, it always has been ~ unlike Barratt and Taylor Wimps in the credit crunch, and they both nearly went t.ts up accordingly...
So, anyway, all the above probably only throws more fog rather than light at the situation, but it does fairly represent the lens through which I'm seeing this...
Strictly
If its any use I had my house at the time valued in 1990 at £96,000 & it sold for £51,000 in 1992, about a 47% drop, just saying.
I think the risk of a "collapse" in house prices would be much more likely if it were combined with raging unemployment. (I am old enough to remember mortgage rates and economic/employment situations personally and GB wide from my first mg in 1977 to the present-albeit with a sometimes fuzzy recall!)
The media as usual is content to give us half the story and then to set it in the scariest of contexts.
For the 300,000 or so coming out of a fix over the next 3 months it will of course be a shock.The majority of these will have been in a 5 year fix at historically low rates. So assuming:
1. They have had a good record as regards meeting their repayments
2. Their salary/ies will have increased over the 5 year period-so affordability criteria should have improved-unless they have had a whale of a consumption time enjoying low int rates
3.The property will most likely have gone up in value so their LTV ratio will be moving in their favour
Then what's to stop them (assuming they cannot really afford the new repayments on their maybe 25 year term) to obtain a new deal over a 30 year term. )
OK that would increase the payments over that extra 5 year period but most mortgagors build in an over-payment option which could be on the cards when things get back to some sense of normality.
Question:
Do I sell BDEV today and miss on the div and buy back cheaper tomorrow or hold for the 25.7 p div?
Answers on a post card please!
"Fair enough, verified data would be nationwide. "
...............................
Smartepants,
You are correct....
Firstly, in that I do have a poor memory, as I'm sure any of my family would be very quick to confirm... ??
And secondly, yes, these are nationwide figures and, as it happens, from the Nationwide building society....
See the link.
https://www.nationwidehousepriceindex.co.uk/resources
If you do go onto the website, there's an interesting graph showing the track of house prices adjusted for inflation…
And that shows a far wilder swing in prices over time as compared to a graph you might make yourself of just house prices movement, which shows essentially onward ever upward progress marred by two mere blips (in relative terms) since 1952, each for about 20% and the first taking longer to recover than the second.
So, if we are in for an indeterminate period of inflation at an indeterminate rate, and based on history, it seems to me quite feasible for prices to hold ground, more or less, but still giving rise to substantial losses in inflation adjusted terms.
But I make no prediction here, I'm just saying that it seems possible, and if you look at the two graphs discussed above (one of which you'd have to sort for yourself) you can see that it actually came close to that on the two blips, because the inflation-adjusted changes are of a different league of magnitude.
Strictly
Fair enough, verified data would be nationwide. If you look at London and the South East it would be more like 50%
"This is Money" report (2008) said av house prices fell from £62 k to just over £50 k from 1989-93.
I make that a 20% fall.
For those able to buy up distressed sellers properties at auction during this period then it is entirely possible that the mindset would be set at around 50% rather than the verified data of 20%
You must have an extremely poor memory if you say the early 90’s crash only led to a 20% fall in prices. It was at least 50% and I was a property developer/ investor at that time so I do know. Normal Lamont, the chancellor at that time, famously sang in the bath when he increased the base rate to 15%. 8% rates now will be very similar because this time we have started from 0% whereas in the 90’s the increases started from approx 6%.
My £3.50 level that everybody scoffed at a few months ago has been reached but with the recent budget I am now convinced we will be dropping into the 2’s.
Thanks for responding Gary. Good luck with your strategy on builders. You will suffer in the short run but after a couple of years I am sure you will be well in the money. If you do ever come across a UK homebuilders ETF - feel free to share the details
Mdunsire, with. respect. I think you are just listening to all the. noise. from the. media They aways. over react and sensationalise everything. whether its. global warming, Covid or. whatever. Yes. there. will be a. slowdown in. housing to. some extent, but mortgages. are. still. affordable. Wages are. rising. Inflation is too but when inflation. comes. down, wages. will. not! There is. every little unemployment or. fear. of it - unlike. previous. recessions. It is a good. time. to buy. housing. stocks. and hold. for. a few years. Good luck.
Expect housebuilding shares to fall another 50%.....the housing market is on the brink of the biggest crash ever seen...with a light touch crash of -40,% in house prices and a worst case severe fall of 60 to 65%....once mortgage rates hit 8%...
Gary,
I have three rules for investing for myself...
The second of these is:
Be prepared to wait up to five years, at any time, before taking any money out...
That's not the same thing as investing for four years and fifty one weeks, and saying to yourself there's only a week to go....
Because tomorrow, or any time, might prove to be be the start, and not the finish, of the required five years...!
Strictly
SB thank you for your thoughts & for sharing your philosophy I hope the dreaded takeover dilemma remains in the shadows, particularly BWY. I did gamble (cos that’s what share buying is) £25K on housebuilders a couple of weeks ago & I’m still confident in the sector although the benefit of hindsight or some luck would have been nice.
I’ve read of a few people selling these the last few days at large losses & I feel for them of course, what I would say to anyone thinking of selling is remember why you brought these in the first place. The fundamentals haven’t changed much & unless you need the cash I would hang on. The dividends will keep rolling in, they might be cut, might not be, but folks will still need houses & the government still need house builders. I am happy to stick my neck out & say that I think it’s a possibility that a scheme along the lines of “help to buy” may well be forthcoming. Just think what effect that would have on the profits & the SP long term.
Stay strong & carry on.
“Strictly where are you?”
..........................
Gary,
Your comment made me chuckle ~ so thanks for that, at least ~ even though there doesn't seem much to laugh about right now and also I'm not sure what comfort, if any, I have to bring to this...?
But let me say this anyway....
I have acquired an investing philosophy over more than twenty years in this game which is that "I'm more fearful of being in cash when I should be in shares than I am of being in shares when I should be in cash".
And, of course, being invested solely in house builder shares, as I am, clearly I should have been in cash thus far this year then I wouldn't now be sitting on a loss of over 40% for the year to date (that’s if I sold today, because obviously there's no loss taken until either you sell shares or the company concerned goes belly up).
But, while I did manage to largely swerve the covid iceberg, I am resigned to otherwise not being able to foresee these bad boys coming down the pike at me so have to accept the inevitable likelihood of remaining fully invested through these sh.t storms.
For example, my initial response to the so-called mini budget last week was “At last, a Conservative government with a small “c” ~ which just goes to show how much I know!
I have written a fair bit on a separate, private blog about having now shifted to only taking dividends for income and not cashing shares.
While this still leaves me vulnerable to takeovers at stupidly low prices, it also sets me 100% free of Mr Market and instead leaves me solely reliant on how Bellway do (which is where I’m currently invested).
And the last we heard from Bellway, they have done fine for last year and are promisingly well sold so far for this year.
There are plenty of mutterings about house price falls…
In my lifetime so far (and I’m now 70) there have been two ~ both in the region of 20% from top to bottom.
The more recent one, the credit crunch, did knock Bellway’s progressive dividend pay-out off course ~ and it took them seven years to fully recover their mojo in that respect.
But during the first, in the 1990’s, their dividend policy didn’t miss a beat, and progressed upwards every year from 1983 to 2007.
So, here I am… in the bunker… helmet on…. praying not to take a direct hit…!
Strictly
Strictlybricks your wisdom is required, your soothing posts are required, your experience is needed, please post soon.
At least they can buy a lot more shares back for the money.
Things are different from last time but one thing I remember was thinking 'I wish I'd bought a lot more house-builder shares before their prices returned to normal'
It doesn’t matter how good their financial situation is if prices drop say 20% it is going to have a massive effect on their bottom line.
I. think you. have to remember that now the builders have a far, far better financial. situation than they did. during the last financial. crisis. I know it ie easy to be affected by all the doom and gloom in the media. My advice, as an investor. for. 40 years, is ignore the media - everything there is an over reaction - simply. to attract attention. and in the case of newspapers - to seek more. f them!.
Not all mortgages are being withdrawn - just the. fixed rate ones, naturally. Those. who really want. to buy. will try. to organise their. finances. accordingly. People, especially. first time buyers - once they have that determination to. have their. first house, will by. hook or by crook (not literally!). find a way. Yes, I am optimistic . I stay happy that way and things. usually. work. out. Good luck to. all.