Rumours in the City have it that Barratt will soon be coming cap in hand with a rights issue. It wants to be baled out of its debt mountain. If it happens, then expect a flurry of activity from the other quoted housebuilders who, with the notable exception of Berkeley, all seem to be sinking in debt that they can’t service. They are all waiting on an upturn in the housing market to enable them to get back to business as usual, get building and start raking in the profits once more.
If Barratt was a single householder, it would have been repossessed by now. “Behind on the mortgage payments, are we? Well, you’ve got two weeks to get out.”
But of course the UK housebuilders are collectively too large to be repossessed, so the banks don’t dare pull the plug. For a start, there would be almost no one around to snap up all the land which would be sold off, and this would put further downward pressure on prices, which the banks fear as much as anyone.
But what if the fabled upturn fails to materialise? What if the way things are now is how it’s going to be from now on? Maybe this is what a stable housing market looks and feels like? Instead of forever looking for signs of whether house prices are going up or down, just accepting the fact that they really don’t change that much from year-to-year and learning to live with the consequences.
One of which would be that we wouldn’t need cash-hungry housebuilders anymore.