Finanze Daily Digest - 15/11/2022

The Brief: Bloomberg reported that UK homebuilder surplus capital returns will most likely end after market headwinds continue to threaten bumper payment programs. The media company estimates that Persimmon paid a total of £4.85 billion including special dividends and buybacks since 2011 to its shareholders. Other large homebuilders such as Berkeley Group Holdings, Taylor Wimpey and Barrett also rewarded investors with so-called super-sized payments in more than a decade.

Why It Matters: Just last year, these homebuilders handed their CEOs huge bonuses such as Persimmon’s chief, Dean Finch, with £2.6 million and Taylor Wimpey’s Pete Redfern with £2.8 million before leaving the firm - these are on top of their fixed pay and other benefits. But the tide had turned since then as the housing market now braces for a looming recession, which many believe may have already started.

Finanze Foresights: The country’s home construction industry benefitted mostly from the Help to Buy program that raised demand for new homes. However, in the past weeks, Persimmon, Taylor Wimpey and Redrow have all reported a slowdown in sales and an acceleration in cancellation rates, causing analysts to doubt the future of housebuilder shares. After the Bank of England (BoE) raised its rates in December last year coupled with uncertain consumers, the FTSE 350 household goods and home construction sub-index has never recovered. It will be a tougher year ahead as affordability issues will still linger for many buyers. --- To the fullest extent permitted by law, Finanze Ltd are not responsible for any errors or omissions in any statements, views, opinions, facts, figures, commentary or any other material in the articles contained herein, or for loss arising from its use or performance, or for the results of any actions or lack of action taken on the basis of information provided in articles.

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