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Money line,
What struck me about this shared ownership scheme was that other housebuilders don’t seem to be offering it, and it’s not available on pre owned homes, which give crest a competitive advantage in a market where buyers are few and far between.
From the HB’s perspective it’s just as good as help to buy because it’s more affordable per month for a FTB, and the deposit is still 5% (10% of the 50% share).
The total monthly payments will be lower on this new scheme because they buyer is making payments on a 45% mortgage + 0.23% per month (2.75% p/a) on the rented 50% share. This will be cheaper per month than both traditional renting, and paying a regular mortgage, with or without HTB.
Registerme,
Its an interesting scheme, the shared ownership model does only make up a very small percentage and the shared ownership schemes never seem to sell as well in London, cant say much about outside of London however.
The help to buy was a different beast that counted for so much in london for one and two bed flats at £600,000 and below.
Its a simply Supply/Demand example though, over the course of the next 10 years we will require more homes and we never keep pace with new homes being built in line with the demand that is still strong. House builders will invariably have to weather the storm of the market for the short term. I think its an interesting take to consider a potential takeover, yet there isnt the market currently to make this worthwhile, land is being banked in readiness for lowering inflation and interest rates, which hopefully will be on the horizon next year. Still think housebuilders are well priced at the moment, yet there may be further to fall for many.
Money line,
Re help to buy, Crest has just partnered with legal and general to launch its own scheme which is very similar help to buy.
https://www.warwickshireworld.com/lifestyle/homes-and-gardens/local-warwick-homebuyers-benefit-as-crest-nicholson-launches-new-shared-ownership-scheme-4383385
I bought 50,000 shares of Crest at 172, so I’m currently about 10% under water, but I’m not phased in the slightest.
I paid exactly half book value, so I’m happy with the price I paid. Sure, it would’ve been nice to get in cheaper but hey-ho, I’ll buy some more at a bigger discount. Now the market cap is sub £400m, with about £850m net tangible assets on the balance sheet, this will get a takeover bid I reckon, most likely from BKG- They’d be daft not to.
Next year will be the toughest year for the property market, Im an estate agent in London and have seen a large change in buyer sentiment. I’m not sure how much of a correction there will be, but there will be one. The lag time from the QE package will take us to April/May next year when we will see the full effect. The autumn budget is going to be instrumental in how the market will fair next year, a cut in stamp duty will help. However the biggest factor for me is the help to buy scheme ceasing, this was such a huge percentage of house builders books which has now just fallen off a cliff. I have the long term view that crest like persimmon have acquired swathes of quality land for development in the future, we still do not build enough homes in the uk so long termhouse builders will still perform well, but it most certainly be short term pain for long term gain.
As I write, this is trading at just under 50% of net tangible asset valuation! £876.6m, of which £29m is intangible… priced at £404m market cap…. Crazy!!
Let’s assume worst case scenario:
Always write the intangible's off- leaves us with £847.6m net assets.
Inventories were sitting at £1108.1m on the latest 2023 balance sheet. Assuming worst case scenario, let’s say a write down of 20% due to market conditions- (£221.62m).
LEAVES US WITH £626m OF NET ASSETS (WORST CASE). That’s a 55% premium on current share price!!
The closest competitor to Crest is Berkeley group as it also operates predominantly in the south of England, which is where the vast majority of Crests land bank is held. Berkeley’s latest accounts show it has £1070m of cash sitting on its balance sheet so it would be a great opportunity for it to put a takeover bid in for Crest to get the assets on the cheap?
I’m not saying I’ve heard any rumours of this, just that it would be a great opportunity!
How can this be down 8% on no news?
It’s now trading at 50% of tangible book value. Absolutely crazy valuation. Must be a take over target for one of the bigger housebuilders?
The dividend of 5.5p will be paid on 13th October go those on the register on ex dividend day 21st September
Thursday 21 September
Crest Nicholson Holdings PLC ex-dividend payment date
Https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/july2023
Interested to notice two very big trades of £2M each around 4.20 pm at price of £1.837 (Probably Buys).
Also other big trades of £236K and £437K. I've only just started to look at CRST and assume that these are
actually unusually large and not a regular occurance ? Any comments from you people who have more
knowledge of CRST and have researched them over a long period.
BBC NEWS
EU-era water pollution restrictions for housing developments are to be scrapped in a bid to build more homes, the government has announced.
Berenberg cuts Crest Nicholson price target to 250 (310) pence - 'buy'
Mr G, it is now, time to load up :)
I knew it would bounce but no dry powder until next month, a rookie mistake.
One upside for housebuilders is the price of development land which could and should fall in price allowing profitability to be maintained even in a falling house price market. In the medium term all builders are agood bet imv.
Swingman, for balance i would say the treasury has done very nicely out of the house builders, apart from the business taxes they have lumbered them with the cladding cost debacle - caused by failed government regulation.
Do we know how much they paid?
Asking for more money from tax payers for huge salaries and bonuses has to stop. All these companies are sitting on huge land bank and refused to build more houses to reduce the mega inflated sheds people are asked to pay. No more subsidy and can't manage go to wall. We all are fed up with these tactics to mild more money from all and sundries.
It was highly unlikely the RNS was going to be positive.
Feel sorry for those who bought in when it was pumped up to 210+ in such short time recently.
GLA & ATB.
Update much as I expected - we have another year of falling house prices ahead unfortunately.
Black rock should have waited, worst trading update we could have not hoped for..
Top up at 100p and hold I guess... Gla
Not surprised at this price. Best value house builder share.
Agreed, I’ve been doing the same v cheap stock and great yield, worth tucking a few of the builders away down here
Will add in tranches on further drops (if they happen) but it seems a good initial entry point at 177/8. Risk / reward - famous last words.
Seems a great price to be picking up shares imo.
Perfect time when everyone is scared of an industry rather than specific issues with the actual company.
Gov can't afford house prices to fall much with an election next year and with most people sitting on fixed mortgages there won't be huge amounts needing to sell up (plus banks have agreed to let someone go a year behind before they will reposes) so underlying mass shortage of homes in the country is what will determine what houses sell for.
Also Crest seems the most undervalued in the field so all in all I'm a buyer here.