Monday, Aug 18, 2008
Simple maths lesson, history repeating itself
The Times: Savills: Residential building land value drops 20pc
House prices = bricks/mortar plus land value. Bricks/mortar value is fairly constant. At last year's peak, about half the cost of a house related to land value, and half to bricks/mortar. Therefore, if house prices fall 10% and bricks/mortar element is constant, land values will have fallen by ... er... 20%. As I explained in more detail on my blog, land values have gone up five- or tenfold since the early 1990s, so look set to fal by 80%-plus over the new few years..
Posted by mark wadsworth @ 10:36 AM (818 views) Add Comment
8 Comments
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1. Mark Wadsworth said...
2. mark wadsworth said...
(I missed admin password off first attempt, oops)
3. mark wadsworth said...
Why does 'img src' never work for me?
4. uncle tom said...
Mark,
What makes you think that building costs are half the total?
It's much lower than that..
5. mark wadsworth said...
Try again:
6. mark wadsworth said...
UT, it might be a third in some place, two thirds in others, it is better to be roughly right that precisely wrong. I'm looking at averages and logic, not precise figures.
7. Dbc Reed said...
You can discover the value of the bricks and mortar in your house by consulting the abi (Association of British insurers) house insurance re-build calculator on the Net ; subtract this from the going-price and the rest is land value (or the land will fetch this price).Building land has no intrinsic value( ie its value is projected onto it by external factors) and land taxers believe in reducing it by tax (generating epic levels of revenue) so that houses,like cars etc.sell for as near as possible for their cost of construction.
8. Tenyearstogetmymoneyback said...
In Poole there are people who think having a ten year old luxury house on a site devalues it
(its so much trouble having to demolish it to build apartments)
Look at this for complete madness
http://www.bournemouthecho.co.uk/search/display.var.1365991.0.another_one_bites_the_dust.php
:- Duncan