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Are we in for a Mental May!

8th May 2009

Kingsoak, Jennings Homes, Gleeson Homes, Crosby Homes, Bewley Homes, Antler Homes, Barratt Homes, Redrow Homes and last but not least Bellway Homes.

What do all of these developers have in common?

Their year ends are in either june or july!

So why does this make a difference to you and i?

Because most, if not all of these developers have debt to service.

They have share holders that expect a certain return from the compani9es they have chosen to invest with.

If these companies cannot make the necesary sales then there will be no dividend payouts. This will reduce their share price.

So, when May comes around many of the developers that have been telling you throughout the winter that they do not need to make sales, laughing off your offers of 30% discount, will probably take a very different tack!

Now don’t expect discounts to be at the levels that they were at the tail end of last year, they won’t be.

The property market is a strange animal, when the general economy seems to be worse than ever, developers will be telling you that they are doing plenty of sales.

Because of the shoring up of the banks by the Government, many will not be chasing developers at the same rate as they were last year so ultra enormous discounts will probably not be available.

This however may be a blessing, many of the developers have brought their pricing in line with RICS valuations, so although there are not massive discounts, there are real discounts! Hopefully over the next few months a sense of realism will return to the property investment market.

Personally i think that the much reported 40%-50% discount deals are long gone and to be honest, were only done by a handfull of developers selling whole developments on what would probably be classed as a bad site.

Investors should get used to the fact that the no money down deal is by in large gone, and even if they were available, anyone gearing their property at 100% in this market needs a straight jacket, not a property portfolio.

Anyway, lets see what the rest of May holds, im expecting some great opportunities.

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