Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Bought for the first time at 117 , not too shabby so far
Hi All
Another month and still no end in sight (east midlands)
What about the rest of you!
Cheers in advance
Ben
One other thing are a lot of your houses being bought by Hong Kong money?
I wonder what will happen when that slows?
Just my view
Yes I think you have spotted an untapped market for building underground .
Trunky......or the Victorians solution ,.......no running costs ....A Cellar , a more environmental efficent solution in this changing climate , TW has done rather in the past week a nearing a 10% bounce
The trouble with all these new insulation systems is that theynot only keep the heat in causing refrigeration systems to run on shorter cycles as heat is taken from the system and recycled back into the room,Proper air conditioning is what is needed if the climate stays as it is.
With PART L coming into play next year build costs are set to soar with heat source systems triple glazing solar panels new heating systems possible wider cavities for added insulation the thought is £20k on build costs.
Build cost inflation running at 9-10%, guess that's spooked the market.
Strong results from BDEV this morning but the market doesn't seem impressed. Orders down slightly but value increased, profit to come in slightly ahead of expectations.
OK, well perhaps I need to take my rose-tinted specs out of their box (I'd put them away thinking I wouldn't need them for a while). I think you can add to the good news side that banks have passed extreme stress tests now and are far better capitalised than during the crisis of 2008. However, as you rightly point out, no two recessions are ever the same, so we simply don't know what we're going to be faced with, or when. The banks may be well capitalised but the government certainly isn't. They can't just raise income tax and say "there you go, sorted" because people will retire early or move overseas (as thousands of front-line NHS staff already have since Brexit). Inflation may be running at around 10% now but no-one saw that coming, and who's to say it won't double again to 20% before it can be controlled? Already the energy price cap for January is looking like being significantly higher, unions want double-digit pay awards, there's no obvious resolution of the devastating conflict in Ukraine etc. etc. Are you saying none of that will affect house prices? How so?? Anyway, off to find those specs, I'll try to keep them on for the time being. K
Krusty, we've discussed this here about 3 weeks ago. We're probably going to have a recession caused by inflation not a property crisis. People have recency bias, so they expect the next recession to look like the last but that's almost never the case. These days people pass strict affordability checks, including at much higher rates. For my mortgage I had to pass affordability check at 5-6% rates. We're nowhere near that and like you said unlikely to get there.
In addition, the majority of people have decent size deposits and fixed mortgages, many for 5 years or more. They won't feel the pain for another couple of years and by then the high inflation might be gone and rates might drop again. Gone are the days of interest only mortgages given to people with no means of ever repaying.
In the US and Europe things are even more stable, as they have 30 year fixed mortgages, and those are fixed at very low rates. So those two massive markets are unlikely to drag us down.
Basically, that's a lot of words to say that there will be very few forced sellers this time, except perhaps buy-to-let landlords in case tenants can't pay their rent. I think recently about 14% of properties sold were to buy-to-let landlords. That's the biggest risk IMO. But that only kicks in, if we have a severe recession with lots of unemployment and will affect a small part of the market.
Yes, but once the ugly spectre of negative equity raises it's head it damages confidence across the whole market, new build and resale. In that scenario, everyone thinks prices will drop lower so no-one is buying. That's what happened during the last property price crash. Let's hope we don't see that happening again.
I can see a situation were house buyers can no longer get back the inflated prices they paid for their properties and the market will be in the hands of the housebuilders who can offer beter deals to new purchasers.
Now read the MS note which I don’t understand.
Their bear valuations are based on arbitrary future discounts to current NAVs based on max discounts over both the last 10 years and last 30 years. This looks nonsensical. Discounts to NAV reflect markets concern that TW will go bust. How can you possibly compare 2008 and with now?
Also TW trading at a discount to NAV whereas Perimmon is at a significant premium. I hold all the HBs since a great mid term buying opportunity and no one can call the bottom. If house prices fall more than 20% then nothing will be safe. Will chase down my favourites - TW, Redrow and Vistry.
Re MS note, it’s titled ‘Big bad wolf to blow on HBs’. They favour Berkeley and Barretts with a Neutral and underweight TW and Persimmon as most exposed to cost of living squeeze. It’s all macro. Expect media coverage in tomorrow’s papers.
Well Temple from what I have learnt or not learnt so far in my experience of buying and selling shares shorters will get the price they want to buy the shares they have been selling. And by the looks of it Marshall Wace hasn’t got to the price that they want to pay yet. It is disappointing that the share price is where it is but I will just hold on to my shares and receive the dividend. Lets hope that half year on the 3rd of August is descent and Bank of England doesn’t put any more pressure by raising rates even further.
Paul, good point and I think that's the main reason why I prefer TW to Persommon. PSN has a dividend of 13% but a Payout ratio of 96%, i.e. it's unsustainable unless they borrow to pay it which will benefit shareholders only short term. If it get''s cut, let's say in half to make it sustainable the share price will tank more than 7%. Probably 10% at least. I've seen that many times, for example with Inmarsat. You lose half your divi and get a hit in the share price, double whammy!
TW's dividend is smaller but sustainable, you get what you pay for!
Pro Brexit Marshall Wace betting against the UK again ….
Solid stock going to mid-90s.
Thanks I was rechecking my note and see that the new CEO confirmed their commitment to the 7.5% NAV dividend and that this had been stress tested down to a 20% house price fall/30% fall in volumes. This was at the CMD end May
Poor market sentiment remains from the 2007 days.
It’s true that Western Government’s are deliberately trying to induce a 4 plus year recession, due to Inflation and repossession of assets.
You will own nothing and be happy.
Or buy Silver Bullion and a Gun.
Look how bad things are in Japan.
People work 12 hour days and still can’t afford the rent.Hence why your man got shot today.
I think Inflation is the main contributor to the low share price, because of no real world yield.
Hi Paul. Re you’re observation on Wimps shorts. Bear in mind that many long term holders will hedge via shorts rather than sell and create tax obligations. Not all, maybe few, will be shorting in unhedged trades.
However, we haven’t heard anything from Elliott since their initial interest last December. They maybe orchestrating price suppression, or just hedging their long positions until they are ready to engage. Of course I may be wrong on that count.
Wigan
Good post. I’d add that chronic shortage of land, WFH and cost of renting will support prices. And imo interest rates won’t rise as high as some fear although only because we are teetering on recession!
Very interested to see that Morgan Stanley have updated this morning. They have slashed TW from c. 180p a few months ago to 104p, Underweight! This is out of kilter with all other recent broker updates which are averaging c. 180p.
They have slashed other HB’s as well, including Persimmon at 1,600p. According to a tip in the Times today, Persimmon is rated Avoid, in part because they didn’t replenish their land bank at cheap prices during Covid and are now having to pay top $. However TW raised £500m at 145p mid 2020 to do just that.
And Directors recently bought £70K of shares (plus £500m during above placing).
So how on earth can Morgan Stanley say 104p?
I won’t get the note until next week but intrigued! May be it’s just gauging poor sector sentiment, the price needs to go beyond crazy before the institutions pile in.
I am a bit concerned that TW is about the only HB being shorted? Albeit under 1%
Hi Wigan
I think since the last recession all the HB’s got together unofficially and agreed to control the market and not get caught out like that again, it nearly destroyed wimps!
If you think about it how many different prime ministers have tried to force the house builders to build more, with no success!
Starv the market and you will always have a queue!
Just my opinion
Good luck all
That'll be a buyers market then trunky, unlike the sellers market we've enjoyed for many years now.
Media, Analysts and general talking heads never really understand the housing market. It's their job to attract listeners and eyeballs, with little regard as to the underlying strengths of the modern building industry. Just like Boris they are always searching for a headline, and tomorrow that headline is just fish and chip wrapping. They all know the Brits are obsessed with housing and the price of housing.
They still assume that the builders operate the way they did twenty years ago, when they would take on lots of debt to out bid each other on land. These days builders effectively operate on a build to order basis and all run solid balance sheets with little or no net debt. Gone are the days when builders would build out sites as fast as possible with little regard to quality and the normal building cycle, and then hope to sell them as they move on and repeat the process. When the normal cycle turned they were stuck with too much inventory, too much debt and had to discount units to clear out stock.
The normal build cycle is much less volatile and lumpy these days and given progressive changes in societal working arrangements people have more choice to choose where they live helping to create steady demand for new housing as they exercise their new found mobility. All this adds up to a more stable and predictable business model.
Builders are also making use of more technology to help better manage supply chains and accelerate productivity gains ensuring that margins are either increased, or at least maintained when external factors impact normal operations, as we are experiencing at the mo.
Of course, it is the market that sets the share price regardless of fair business value, and share price movements are exaggerated with the growth in algorithmic trading were professional traders (Hedge Funds, Investment Banks etc.) use their advantage to game the markets at the expense of weak holders and retail traders.
There is no point trying to beat the professionals at their own game, retail traders need to choose to buy when prices are depressed due to market volatility (like now), and expect to hold for a period of time until market sentiment improves. In market parlance, be a swing trader or positional trader, do not try to day trade in volatile markets. Day trading only works when markets are steady, either rising or falling; but predictable.
Buying at these prices will offer large gains at some point when sentiment swings, this might be a few weeks, months or maybe next year. Rest assured sentiment will change as it has in the past, and it will happen all at once. In the meantime console yourself with large dividend payments. Remember, patience is required to choose your entry point and don't be distracted by the taking heads. The rest will then take care of its self.
Of course, all IMHO.