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House Price Crash Forum


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Posts posted by BelfastVI

  1. So, they were essentially putting a 40%+ markup on them previously? And these companies want us to bail them out?! That's 90k pure profit, per house, on even the cheapest properties. No wonder these guys were driving around in their flash cars! <_<

    Not exactly, when you sell a house you are selling both a house and land. You can't really look at the historical cost of the lands (although the tax man will) but rather the replacement land cost, which you have probably already purchased.

    Land in that area last year was about £80 to £100k per plot. So when you pay your tax on the £90k you are left with £63k. Add that to your historical land cost part of the house and off you go to buy new land. Or you stop where you are and pay everyone off. So even though you believed the land and house prices were crazy as you had a large workforce and different sites that overlapped in time, it was hard to think of stopping. Especially when sales were so strong.

    A lot did decide to stop, but with a two year planning lag and then building time, even those who had the foresight to see what was coming, will still be caught.

    That said there is no developer thinking of replacement land now and therefore the cost for land is closer to historical. This brings the asking price down.

    Sorry if this seems complicated but I heard the Nolan show yesterday where this point was mentioned but not explained.

  2. I'd say they are still making a profit on teh actual build of the house but taking a dent in the land bill. I assume that the high prices from last year 200k+ were to also help pay for the huge land costs to build on.

    Wonder if it works out breaking about even when taking into account the cost of land to build on and build cost versus the sale price?

    Don't know what the land cost but as it was purchased perhaps 10 years ago I'm sure it's cheap compaired to recent land prices. Most developers don't have land on their books that long.

  3. In a rising market there would be no problem at all with phase 3 being more expensive than the 1st two phases but in a falling market how can a surveyor justify the increase?

    Surely if the 3rd phase is a higher price (and I think it will be) will the buyers then have to pay a higher deposit when the surveyor comes back with a report stating the value based on the most recent sales?

    It will be interesting to see how this pans out.

    If 600 people turn out after one add, and 53 book. An sharp surveyor might take notice and be prepared to look again at the values. IMHO of course.

  4. I agree that market forces should be allowed to correct the situation from now. But equally the bubble formed in a free market . People freely chose to borrow and banks duly obliged. That was the time that intervention, in the form of regulation, was needed to prevent 100%+ mortgages and liar loans.

    I totally agree

  5. Hmm, so who is buying them? I find it hard to believe that 50 FTB's suddenly within one day saw this and decided they wanted to live in this exact area and went and put their deposits down...

    Would there be any chance this is investors buying these up? If so then it is not really indicative of demand.

    The fact that 50 went so quickly would suggest it was investors scared to "miss the boat", perhaps hoping to put them up for sale again. I m speculating here, but if this is investors then it does nothing to help first time buyers...it just means more properties for rent, and if investors have bought them, then they will want to sell them for more than £139,000.

    So it was a bad idea to slash the prices then!

    A developer delivers what you ask - and you manage to pick a hole in it.

  6. Even if it's exaggerated, it's likely close to the truth. Like I said above, IMO it's a master stroke.

    I can't help feeling they will make a lot of enemies in the industry (and previous buyers) though. However, they will all do the same in the long run and wish they had done it first!

    A lot of other developers have made similar price drops over the past weeks and months. They were reluctant to shout so loud about it as they didn't want to 'rub previous buyer’s noses in it'. However, this doesn’t seemed to have bothered Fraser and now that the taboo has been broken the other developers can feel free to not only advertise their new prices (which they had been doing) but also show the fall (something they hadn't done). This will help illustrate how far the prices have come back from the peak, which I believe is 25% - 30%.

    As someone in PropertyPin put it, Northern Ireland may be on their way out of the slump well before the south has admitted they are in one.

  7. I think one thing we can be sure about now is that, every 3 bedroom house in Northern Ireland in a development will be selling at under £139,000 this time next year. This kinf of arbitrage will be quickly corrected by the market. Many of these houses are still on at £180,000 all over the country. Who on earth in the right mind would now pay more than £120,000.

    Location may play a part. Many houses are in a poorer location than here, but many are in a better location, as many of the posters here have indicated.

  8. There business is developying houses while these remained unsold they cant move onto their next project. I think they got this land well before the boom so can afford to reduce the prices sell quickly make a small profit and move onto the next development!

    Profit is irrelivant, its cash.

    Heard 15 of them sold last night [ to FFT's]. They hadn't planned to release until Thursday

  9. Yes - that's definately what is said*. In practice, it would seem financially infeasible to do so i.e. it would be a double whammy loss for the developer in terms of a) reducing sales price and B) refunding amounts to existing buyers.

    I don't know the company nor its cashflow, but I imagine that their approach is one of "sell at this price or we go out of business" and, if the later happens, then their guarantee doesn't matter anymore :unsure:

    I do know the company and they would be one of the most financially sound companies in Northern Ireland.

  10. It's certainly more progress toward pulling expectations in general down to more realistic levels.

    This is what developers should be doing instead of holding the begging bowl out to the government. Not so good news for those trying to sell second-hand in the same development, though.

    The Goverment has 45,000 people on its waiting list for houses (figures released today) - Why dos'nt the Goverment buy these houses at that price, or lower for a job lot. It has a duty to house the people on the waiting list at some stage. It sold off most of its housing land during the boom. Now's the chance to buy it back with a house on it.

  11. I'm not sure what you're getting at here - are you saying tax taken should be returned again? Tax is taken. Tax is spent. Businesses can't expect to get the tax they spent back again, once they're in financial difficulty. No; they get liquidated. The government will no doubt spend all that lovely money on health, education, policing etc, all of which are much better than bailing out failing businesses.

    Also, PAYE tax would have been (and will be in the future) paid when these people would have been working for other companies instead. Unless you assume they would have otherwise been out of work, this is being taken out of context. The same goes for corporation tax - if the entrepreneurs weren't building construction empires, they would be out building a different business. Perhaps even export businesses which bring wealth into the country as well.

    As for the stamp duty, I suppose that one could stick. Then again, no one is forced to move house or even buy a house. People were willing enough to pay out stamp duty and I'm pretty certain none of them expected it to come back to them again. At least not while they were in good health and in employment.

    Just because a company has paid lots of tax, it doesn't give them a right to expect it back as a bailout.

    I am just saying the Revenue has benefited well out of the boom. I don't think we can argue with that. PAYE; if you take an industry that employs 10% of the workforce out of the equation you cannot expect the job market to soak that up. If 50 new jobs are created somewhere that is front page news. 30,000 to 50,000 just wont be absorbed.

    Don't get me wrong, building will start again and these people, or most of them will get jobs again but there is no escaping or denying the hit this will have on the economy.

    No developer will be bailed out. Don't worry the banks will see to that. They will clean them. So don't get over concerned about them. Its the work force who will suffer.

  12. While the government has helped companies which have come on hard times, I'm struggling to think of companies which have been bailed out due to a bubble bursting. Certainly, in the recent past, there were many .com companies which were left to fall on their own swords.

    Some of the .Com companies, didn't have a product and very few employees. They didn't have a business to save.

    Shorts received £150m last year. I'm not saying that was right or wrong, I just don't remember the debate. When Seagate sadly decided to move somewhere cheaper there was an outcry about the £10m in grants and the free factory they had received. Farming could not exist, because of the extensive red tape, without the subsidy it receives. In fact there was a total outcry two years ago when they decided to pay it all in one cheque (single farm subsidy) at the end of the year instead of quarterly. So you can see how they depend on it. IDB pays out £ms every year to any business man with a good tan. (I know a few developers who could now approach them)

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