Are Brokers Set To Bail Out UK Housebuilders?
While the likes of Barratt Developments has been at the centre of much speculation about their financial position, the sector as a whole has seen a number of doom and gloom forecasts for the months ahead. While Barratt’s came forward to dismiss the rumours of a financial crisis, the company did not dismiss out of hand the fact that funding may be required to continue trading. So what is going on behind the scenes?
It now appears that the Barratt Developments and other housebuilders are in dialogue with brokers such as UBS and Credit Suisse with regard to a possible bailout fund for the sector. Much like the financial sector, if one of the major housebuilders was to hit financial difficulties this would have a knock on affect to the rest of the industry. Again, much like the financial sector, confidence is a major factor in the house building industry and if potential clients feel that their new homes may not be finished or they may lose out financially, we could see a further sharp reduction in transactions.
There are many similarities between the housebulding and the financial sectors as both have gone through a period of ‘over exuberance’ for which they are both now paying the price.
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