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UK Housebuilders Feeling The Pressure

There are real concerns this morning that we are on the verge of a 1990s style housing slump which could literally wipe out a whole host of the UK’s best known housebuilders. Since January this year the sector has seen £4.6 billion wiped off it’s overall value and share prices are again in freefall this morning due to concerns about a possible repeat of the 1990s style slump.

Respected broker Merrill Lynch has warned investors that the similarities between the current situation and the 1990s housing market crash are very much there for all to see. Falling prices and concerns about potential unemployment has seen more and more home moves put on hold. There is also concern about the price which many of the leading housebuilders were forced to pay for their land banks and the affect this may have on their short term profit margins.

Many people will recall the vast number of mergers and acquisitions in the housebuilding sector over the last few years. This was supposed to herald a new era for the housing sector but so far the acquisition prices agreed for some companies look substantially over priced in the current market.

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