UK Housebuilding Sector in 1Q 2019

09 Apr 2019 / Corporate research

Brexit: Y2K déjà vu


Y2K is a numeronym and was the common abbreviation for the year 2000 software problem; and, for the benefit of millennial readers, the abbreviation combines the letter ‘Y’ for year and ‘K’ for the SI unit prefix kilo, meaning 1000. Hence, 2K signifies 2000.

It was also named the ‘Millennium Bug’ because it was associated with the popular (rather than literal) roll-over of the Millennium, even though most of the problems could have occurred at the end of any ordinary century.

In essence, Y2K was a class of computer bugs related to the formatting and storage of calendar data for dates beginning in the year 2000. Problems were anticipated, and arose, because many programs represented four-digit years with only the final two digits – making the year 2000 indistinguishable from 1900.

In reality, the fear of a fallout was huge – to the extent that TIME magazine highlighted the hysteria on its cover on 18 January of 1999 under the headline: The End of the World!?!

At the same time as Y2K-problem lawsuits began to be filed, wilderness-survival bootcamps became more popular and NBC aired a made-for-TV movie about ‘the coming disaster’.

Of course, there was no cataclysm, as prognosticators at companies and organisations –worldwide – checked, fixed and upgraded computer systems to address the anticipated problem (with some ease as it turned out).

As a result, very few computer failures were reported when the clocks rolled over into 2000. Okay, UK railway self-service machines did print tickets bearing the date ‘00 JNR 00’ for three months until mid-March 2000.

In these dog days of Brexit uncertainty and fear, we have yet to see a TIME cover; but have we lived through the present situation before?

There will be an unravelment and a solution; and as veteran economist Richard Jeffrey said: “as far as I know the UK has not been towed out into the Atlantic and abandoned”.

Consensus forecasts point to modest GDP growth (1%-2% p.a.) in 2019 through 2021, increasing private housebuilding volumes (3.3% p.a.) and rising house prices nationally (ca.2% p.a.).

Similarly, consensus earnings forecasts for the UK Housebuilding Sector are for growth of 2% and 3% in 2019 and 2020, respectively, with a prospective yield above 6.4%.

In 1Q of 2019, the Sector rose in value by 18% (and by 2.5% In the first week of April); it does not want to go down.

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