No 'mortgage time bomb' so buy builders, say analysts

The target prices you highlight for Barratt and Taylor Wimpey are the current share prices. Is that correct?

#Jolyon Robinson.

You can check current share prices to the right of your comment.

Its not the threat of an interest rate rise that should be a concern for the builders. At the moment they are all on thin ice and I would avoid buying at all cost.

House prices are falling, we have just had the dead cat bounce and the resumption in falls have continued. Builders can't sell their homes at the moment unless it is on some type of gimmick scheme such as shared equity/ownership, part exchange or to foreign investors like Barratts is doing with the Chinese

Banks won't lend to buyers for these newbuilds the amount the builders want. So as their gimmick schemes run out off money and house prices continue to fall the builders vulnerability will be truly exposed. They are dead men walking. House price falls will force them to revalue their land banks putting them all back into red with their shares spiralling down.

I would avoid builders shares completely.

the house price index (average house price divided by average earnings) needs to fall to around 3.5 before one should even think about investing in the sector. It's still around 6 - residential property has a long way to fall before the next upturn in the cycle starts - houses are still hugely overpriced in relation to the present and near future economic conditions.

Talking up the market when the HPI has so far to fal is grossly irresponsible and comes only from those with vested interests.

Banks aren't lending because they know the truth - we're still in the downward leg of a well established, and thus predictable, cycle.

It will be at least 5-10 years before I would expect to be investing in property.

And, with regard to commercial property, that too is for suckers. Commercial rents are already falling and will go into free-fall. Valuations will thus tumble.

You'll all find this out on the day that the BOE put up interest rates.

Hugh

(elderly private landlord who has lived through several such cycles)

I saw an offer that the builder would pay the buyer's stamp duty. This is stupid as they actually end up paying more tax. For example a house that is £300,000, the builder offers to pay the 3% stamp duty meaning the total paid for the house is £309,000 including £9,000 stamp duty. If they had offered the buyers a discount of £9,000 on the price the cost of the house would be £291,000 + £8,730 stamp duty. So they just throw away £270 so it makes their houses look like they sell for more.

HS Smith above, is the only one who seems to know what he is talking about, except that what he calls house price index is in fact the house price/earnings ratio, the best measure of house affordability. It currently shows that houses are hugely overpriced,

. Note that wealth managers and advisers are as usual divided 50/50 because they are the most ignorant of the lot. Just impostors using trade jargon to conn wealthy fools.

Barratt and Taylor Wimpey are up to their nostrils in debt, they cannot borrow any more and will fail as soon as interest rates rise.. The FAs who recommend buying them are trying to talk the market up to save their own skin and that of their clients whom they had advised to buy just before the housing crush at 8 times current prices.

Make a note of their names and avoid them in future like the plague.

Unemployment might be falling in some areas but not the North East as redundancies are announced daily. If the mortgage rate goes up then there will be a rush of repossessions. There are hundreds of new builds in the North East standing empty as there are concerns about redundancies and also lack of mortgages available. It might be OK for an interest rise in London and the Home Counties where property prices are still rising but a disaster for other areas of the UK