Friday, Apr 25, 2008
Pushing a piece of string
FT: Ministers given warning about 'unrealistic' target for new homes
The homebuilders have well and truly thrown in the towel (see article). "However, Caroline Flint, [the very tasty] housing minister, appealed to housebuilders not to be driven by short-term problems. "It is essential - and in their own interest - for housebuilders to base decisions on the economic fundamentals and longer-term trends."
Er ... since when it committing commerical hari kiri in homebuilders' own interest?
Posted by mark wadsworth @ 03:50 PM (939 views) Add Comment
19 Comments
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1. uncle chris said...
Do government ministers (none of whom are tasty!) actually believe that anyone is going to take a blind bit of notice of anything they say anymore. Do they not fully comprehend the contempt with which politicians are held these days.
And in any case, there is little point builders continuing to build thousands of houses if the people that need them cannot afford them. If you want houses built DisHon Flint, then damn well do it yourself and set the prices/rents low. Oh heck, that might be considered Social Housing and may in fact help the poor - better steer clear Gordon.
2. titaniccaptain said...
"Caroline Flint, [the very tasty] housing minister" .....................oh yes but she has to be its hard to say no to a pretty face
3. justwatching said...
I'm totally unaware of the figures. How much profit is in a new house? Are builders going to build when they could potentially lose money on new houses? This must be long into the future?
As for Caroline, and the rest of the new Liebor f*ckwits, Its a MARKET, these are BUSINESSES, NOT PUBLIC (apart from the C*ck) COMPANIES. Then run themselves for profit. Not to keep you incompetent tw*ts in glubberment.
4. cornishman said...
"It is essential - and in their own interest - for housebuilders to base decisions on the economic fundamentals and longer-term trends."
That's quite a neat bit of linguistic fudging. You could take that either way according to what you wanted to hear and depending upon whether you were a commercial organisation looking after the shareholders, or someone wanting the government to build more houses.
And I agree with uncle chris - no ministers are tasty. Come on.
5. montesquieu said...
They could try cutting prices ... nah that's too radical.
6. mark wadsworth said...
Justwatching, homebuilders play a very long gain. Whether they can make a book profit depends how much they paid for the land. But they look at real profits, not book profits.
At a very rough guess, if you buy a new house today, it's one third builder's profit, one third land value and one third profit/interest for the builder.
So if you are a builder and think that house prices will have fallen by more than one third by the time you are finished (a couple of years?) then there is no point starting. If land values fall (in tandem with house prices) well that's tough sh1t, nothing you can do about it. But it would be mad to build a house if you thought that the price fall was going to be equal to or more than your entire profit margin.
7. mark wadsworth said...
"long game", obviously.
8. uncle tom said...
Once upon a time we had government ministers who had run successful companies, who understood business. who usually had some skills or experiance that was relevant to their government department.
Not any more - and does it show!
Housebuilding is a good vehicle for pulling an economy out of recession, and we're going to need the mother of all tow trucks in a couple of years time!
All that is needed is an adequate supply of land, and a bonfire of planning constraints, especially for self-build schemes.
Do we have to concrete over the entire countryside? Actually, no. If just a half percent of the undeveloped land in this country (one acre in 200) was allocated for residential development, there would be an ample supply for the current population.
9. mken said...
What are the statistics - is there really a demand for new housing.
From whom? How much property is standing empty. Etc.
Has the population increased etc.
One strange thing I notice about adverts for investment in 2nd homes abroad, is that in many of these
countries the populations are decreasing. No so in the UK?
10. justwatching said...
Mark, so, if your figures are close to being correct, Persimmon are pricing in a 30% fall?
11. mark wadsworth said...
JW, basically yes, they are pricing in a fall = or >= than whatever their current profit margin is, which may of course be less than one-third.
(you can ignore the published profit margins, these are far lower than the gross margin)
12. mark wadsworth said...
I messed up at comment #6, it's one third profit/notional interest/planning gain; one third land value; and one-third proper costs like bricks and architects and so on.
13. icarus said...
Badger "urges" mortgage lenders to free up mortgage funding, Caroline F "appeals" to builders (this isn't a wolf-whistle joke) to build after they've decided to down tools. Shows how bankrupt this govt is - it obviously can't create incentives to get companies to go along with its policies. Shows how much they know about business too. You can't tell public companies not to be guided by short-term considerations when most CEOs are driven by short-term share prices.
14. it_is_going_with_a_bang said...
No house builder is going to build homes they can't sell. It's as simple as that.
If the government wants to fund a huge number of council house style builds then so be it.
But if they don't want to pay for it then quite simply why would anyone else?
Put 50 Billion to good use and build say maybe 250,000 to 400,000 council houses.
They are in the mortgage business after all :-O
I can see the 'get of jail / get out of house building' card being dusted down by Gordon Brown already. The blame game of why it hasn't happened has already started.
15. confused76 said...
Just one word for the house builders
DOOMED!
16. denzil said...
Good grief!
Yesterday I implied Kirsty and Beeny were "tasty" and all my blog posts were removed for being in contravention of blog policies.
I can only conclude and reveal that the HPC blog meister is none other than Kirsty Allsop and the whole HPC has been a dastardly ruse.
17. mark wadsworth said...
Icarus:
As much skullduggery as goes on with these homebuilders, they do not take a short term view, they plan at least five years ahead.
It is going with a bang:
Average build cost, new home (large flat or small house) =< £100k. Given that The State owns loads of land, for £50 billion they could have half-a-million new houses. And use future income from rents to reduce the tax burden. Yippee! Everybody wins!
Denzil:
Lean Mean Queen of the Property Porn Scene is Naomi Cleaver.
18. dohousescrashinthewoods said...
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=475517&in_page_id=1770
19. barb777 said...
Don't panic because all the economically inactive builders can build the make believe houses.