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BelfastVI

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Posts posted by BelfastVI

  1. Agreed, although not all farmers owned zoned land many did at least have the opportunity to build a second home on their property and then sell it on.

    Perhaps the assembly might want to consider a "windfall tax" on those land owners and "land flippers" who made such obscene profits. They could use this revenue if they wanted to support the construction industry rather than misspend the tax taken from the rest of us.

    Too late, they cant back date tax reforms, and these 'killings' will never be repeated. The builders who ended up buying this inflated land will have to pay 30% tax on their profits ( but I don't think there is any of them currently worried about that).

  2. Farmers lash cash strapped developers (what an image)

    http://www.newsletter.co.uk/news/Farmers-b...-for.4417391.jp

    This has to be somebody having a laugh. The people who made the most out of the boom, apart from the Revenue/tax payer was the farmers who were able to offload their land to developers for £m per acre. This land cost them a max of £10k per acre. They were usually able to do this and only pay 10% tax. Fair play to them. Although if, in the future we try to look at where all the profit from the boom went we will see that the land owners and those ‘land flippers’ (who never built a house) pocketed it.

    Developers were never interested in 99% of farming land and only looked at the land that was zoned or had the potential to be zoned. The Farmers are only disappointed that they have stopped knocking. One of the last sales in the boom was a 75 acre farm in Lisburn that sold for over £100m.

    The farmers have got plenty of subsidies over the years, the biggest problem they have is their largest client, the government won’t buy British/Irish beef for its schools, offices, army etc and would rather buy poorer Brazilian products whilst strangling them with red tape and quality control.

  3. I agree with posts 7-12, well said. I also want to ask BelfastVI a question. Do you think it is fair to use taxpayers' money, including those priced out of the property market over the last few years, to prop up the market and keep it out of their reach forever? Because I don't.

    I hope that this crash will play out quickly and that few will lose their jobs. But the ONLY thing that will kickstart the market is falling prices. Whe prices fall to a sustainable level, the recovery can begin. Nothing else will work in the end. Bailouts will be a disaster in the medium to long term. The solution is in front of our eyes, yet some refuse to countenance it. But FTBs were priced out several years ago and can't return till prices are significantly lower. That includes me.

    Welcome by the way, and I am interested in your views.

    In my statement I never suggested propping up prices where they were or even where they are now for that matter. I suggested £180k, which is well below the current average and went on to say that the Government could set the cap on the Co-Ownership scheme where it sees fit. This will then set the market and bringabout a faster adjustment, which should have the desired effect without the mass unimployment.

  4. Both individual construction workers, plumbers, electricians etc. and companies in construction (like the banks and everyone else who profited in the boom years), made a few lifetimes worth of cash when the going was good.

    The sensible and prudent will have put some of that cash away for the inevitable slump, so I don't believe this will have as much of an effect on the wider economy as is claimed. On the contrary, helping these people now hurts the economy in the long run.

    Those who failed to pay attention to the wider economic situation, stuck their heads in the sand or whatever, essentially planned to fail.

    There is NOTHING to be gained from rewarding the imprudent for their failures. Learning and growth happens more from failure than success. People need to learn from their bad decisions. Bailouts simply compound the problems and delay recovery.

    As a society it is absolutely essential, absolutely critical, that we see that the years of easy credit were a mistake and that sustainable and affordable housing needs to be the goal. This simply won’t happen if we bail out the construction industry.

    To me it comes down to a stark choice – do we sacrifice the people of NI’s long term future to help a few (wealthy, let’s not forget) developers. The answer is pretty obvious.

    Just wondering did anyone complain when the government handed over £150m, last year to Shorts to help them win a bid. Did anybody know about this? I understand a US agency is taking them to the EU. I am not saying the gov was right or wrong here.

    These builders can forget about demands to the banks. The banks are moneylenders and will do as moneylenders have always done - look their money back. They run business, just like the builders and have equal, if not greater cash flow problems of their own.

    There are 30,000 people on the housing waiting list. The programme for Government shows funds towards housing these people over five years. Why not allow co-ownership to go again, but with a sensible cap of say £180,000. (25% below peek average & 20% below the current alleged average). This is unlikely to give any profit to the "wealthy builders", because of the price they paid for the land, but it would allow them to keep employing their workforce and suppliers, thereby saving the taxpayer from paying out more benefit and would relieve the long waiting housing list. This could all be done for substantially less than budgeted for in the program for government, therefore saving the tax payer more. This is not a handout as the government would be getting cheaper houses in return. In fact they could set the cap at what they see fit and this will, to some extent set the market.

    Please remember these "wealthy builders" are few. The vast majority of the thousands of people employed in the industry are ordinary Joe's with mortgages, families and dreams of their own. They went to work with little or no knowledge of the storm that was building. The industry is the largest employer outside the civil service. The cost to the tax payer and to the economy will be massive if the government just stands by as many on this board wish.

    We can’t allow any jealousy/loathing of the few to allow us to support the crisis facing the many. If this was any other industry, be that textile, electronics (Seagate), banking (Northing Rock & and the rest £50bn) or anything close to our shipyard the government would have stepped in long ago. There is no way it would have stood back or even exasperated (freezing co-ownership) and allow tens of thousands to go unemployed. Especially when it has in its plans the construction of 30,000 new houses.

    This website is influential, there is a lot of informed opinion from different quarters and all this is welcome. I am sure reporters read this and it will help to inform opinions. We need to be careful with our knee jerk reactions and be conscious of whom our readers may be.

    What is the goals of this website. Is it to see anyone who ever dared to invest, employ, take a risk to be public humiliated and ruined so you can have glad pickings over the remainder.

    Or do we want a normal, stable housing industry with affordable housing and employment for all. Remember everyone wants houses to lower in price until the minute they own one. At that moment every one of you, and I don’t care what you have said in here in the past, everyone of you will feel a warm satisfaction and contentment of seeing a similar house to yours selling for more in the future.

    Many of you hope to be in that position some day. Many of you may decide never to buy after what we have seen and that is fine. When do you buy. I have always said you buy first of all when you need a home, and secondly when you can afford the home. I guess I will how have to add to that a thirn. When you are sure that that home will not fall in value any more. The first two are straight forward, the third, now there’s a question and I'm sure 90% of you could step forward to answer it, with good facts to back it, I'm sure.

    What I will say it this. All builders have stopped building new houses for some time (excavating new foundations). Some are building out what they have and discounting and selling. Some are down 40%. What I have seen is good houses are selling (at a good discount). The houses with poorer layouts, parking, gardens etc., are not. The builder discounts again and the better of these sell. And it goes on and on. Now the builder, if he is still there, will not start new builds until it bottoms out (this is important). And at that moment you, been so well informed, will obviously swoop. But you will be getting what the builder couldn’t sell at 10% above bottom. So my advice is look now and watch. The bottom is just like the top, very easy to miss. That’s new build.

    Resale’s - they will be like letting air out of a tyre. They will keep falling for years. They are already away behind the newbuild values. In Lisburn they are £60 to £80k above where new-build prices now are. They will continue to fall for years. And as they represent 60% of housing sales they will mask the figures and hide what's happening to newbuild. We can see that already as we all know new build has fallen more than the reports show.

    Sorry for the length of this, for also posting it elsewhers and no doubt the quality of the English.

  5. The question is, how do we make it crystal clear to our MLAs that gifting taxpayer's money to wealthy (and stupid) builders will not be tolerated?

    Just wondering did anyone complain when the government handed over £150m, last year to Shorts to help them win a bid. Did anybody know about this? I understand a US agency is taking them to the EU. I am not saying the gov was right or wrong here.

    These builders can forget about demands to the banks. The banks are moneylenders and will do as moneylenders have always done - look their money back. They run business, just like the builders and have equal, if not greater cash flow problems of their own.

    There are 30,000 people on the housing waiting list. The programme for Government shows funds towards housing these people over five years. Why not allow co-ownership to go again, but with a sensible cap of say £180,000. (25% below peek average & 20% below the current alleged average). This is unlikely to give any profit to the "wealthy builders", because of the price they paid for the land, but it would allow them to keep employing their workforce and suppliers, thereby saving the taxpayer from paying out more benefit and would relieve the long waiting housing list. This could all be done for substantially less than budgeted for in the program for government, therefore saving the tax payer more. This is not a handout as the government would be getting cheaper houses in return. In fact they could set the cap at what they see fit and this will, to some extent set the market.

    Please remember these "wealthy builders" are few. The vast majority of the thousands of people employed in the industry are ordinary Joe's with mortgages, families and dreams of their own. They went to work with little or no knowledge of the storm that was building. The industry is the largest employer outside the civil service. The cost to the tax payer and to the economy will be massive if the government just stands by as many on this board wish.

    We can’t allow any jealousy/loathing of the few to allow us to support the crisis facing the many. If this was any other industry, be that textile, electronics (Seagate), banking (Northing Rock & and the rest £50bn) or anything close to our shipyard the government would have stepped in long ago. There is no way it would have stood back or even exasperated (freezing co-ownership) and allow tens of thousands to go unemployed. Especially when it has in its plans the construction of 30,000 new houses.

    This website is influential, there is a lot of informed opinion from different quarters and all this is welcome. I am sure reporters read this and it will help to inform opinions. We need to be careful with our knee jerk reactions and be conscious of whom our readers may be.

    What is the goals of this website. Is it to see anyone who ever dared to invest, employ, take a risk to be public humiliated and ruined so you can have glad pickings over the remainder.

    Or do we want a normal, stable housing industry with affordable housing and employment for all. Remember everyone wants houses to lower in price until the minute they own one. At that moment every one of you, and I don’t care what you have said in here in the past, everyone of you will feel a warm satisfaction and contentment of seeing a similar house to yours selling for more in the future.

    Many of you hope to be in that position some day. Many of you may decide never to buy after what we have seen and that is fine. When do you buy. I have always said you buy first of all when you need a home, and secondly when you can afford the home. I guess I will how have to add to that a thirn. When you are sure that that home will not fall in value any more. The first two are straight forward, the third, now there’s a question and I'm sure 90% of you could step forward to answer it, with good facts to back it, I'm sure.

    What I will say it this. All builders have stopped building new houses for some time (excavating new foundations). Some are building out what they have and discounting and selling. Some are down 40%. What I have seen is good houses are selling (at a good discount). The houses with poorer layouts, parking, gardens etc., are not. The builder discounts again and the better of these sell. And it goes on and on. Now the builder, if he is still there, will not start new builds until it bottoms out (this is important). And at that moment you, been so well informed, will obviously swoop. But you will be getting what the builder couldn’t sell at 10% above bottom. So my advice is look now and watch. The bottom is just like the top, very easy to miss. That’s new build. Resale’s - they will be like letting air out of a tyre. they will keep falling for years. They are already away behind the newbuild. In Lisburn they are £60 to £80k above where new-build is. They will continue to fall for years. And as they represent 60% of housing sales they will mask the figures and hide what's happening in newbuild. We can see that already as we all know new build has fallen more than the reports show.

    Sorry for the length of this, and no doubt the quality of the English.

  6. When the market was booming people believed it would never fall, and keep on rising.

    Problem is now that prices have fallen the same people believe they will never rise again; they need to stay in line with earnings etc., etc.

    What’s the view here, will history repeat itself?

  7. If the interest rates stay high, I'm wondering where these inevitable pay rises are going to come from.

    I suppose companies could pass the costs on and charge more for their products, to pay for the wages. However, this will either add further inflation into the system (eroding the pay rises). If the company relies on exports, raising the price of their goods may not be an option too; it will just make them even less competitive than they already are.

    Perhaps people are just going to have to come to terms with the fact they will be poorer. No more cheap credit and no more living beyond their means. I can't see this changing for some time either... where is the money going to come from?

    This is exactly why the government wants to control inflation. It feeds on itself.

  8. Think of the moral hazrd. The guy next door who has been paying is 600,000 USD sees his neighbour getting 300,000 USD wiped off his mortgage...and his taxes have to bail them out. His reaction will be to default also. I know I would. So people who can afford their mortgages will probably now start to miss payments..in order to refinance...

    Now multiply this out....That is what is happening...

    I just can't see this stacking, either financially or morally for that matter. The government is not going to bail out investors and home owners like that. I think ther are worried about the people who purchased a few years ago on 2 or 3 yeaqr fixed. They are now up and there are no mortgages for them.

  9. They want the BOE to back mortgages...The bill they have passed in the US for FReddie and Fannie means that if someone has a mortgage of $600,000 and now the property is worth $350,000, they will get a new mortgage for $350,000 rather than defaulting. The FED/Government who back Freddie and Fannie then take this loss, and transfer it to the taxpayer...

    Is that what is happening in the US? It would bankrup the country.

    I think what the industry wants is the bank to offer mortgages to people who can repay them. What they should have been doing all along.

  10. Given rising construction costs, it will be interesting to see how attractive that this initiative will be to developers i.e. developers are already looking at significant falls in the value of their houses and, through this scheme, it appears that they are now being asked to provide what amounts, in effect, to a 10yr 25% subsidy.

    I agree, I can see some developers doing this to off-load some existing stock, even if that is at a loss, as they have to pay their workers & suppliers. But I cannot see they digging new foundations to recoup less than costs returns.

  11. The government don't have enough money to make a jot of difference. The housing market has slowed to its slowest pace ever and it's still a multi-billion pound market.

    Don't worry the Government is not going to spend any Tax Payers money on this. The scheme will involve the purchaser obtaining a 50% loan for the property. The Bank will have first charge on the complete property. A housing Association will take the next 25% and the developer will take the remaining 25%. Both of them will have a second charge. The Housing Association can charge a rent for its 25% but the developer cannot.

    The house must be valued, by the lender at open market price (whatever that is) and the builder is to get 75% of that now and the remainder in 10 years ( although that will be fun).

  12. Listening to Ulster radio news at 5.40pm I nearly choked on my tea. There was a story about a piece of land sold by the NI govt to developers for 290 million. Now they can't get planning permission for what they want to build on it and the land is only worth 6million as a result and they want the government to compensate them. ie give them the money back. Unfortunately the money has been spent.

    edit correction it is 200 million and I cant quite make out what the other 90 million is for.

    I am afraid this is not correct. The MoA had its land valued at £200m, which if they sold the funds would go to the DFP. The DFP on the 'strength' of that forwarded £90m for some nitrate scheme and this money was to be deducted from the income of the sale. The £90m is spent and the land will not get zoned for development and is only worth £6m. Ooops!

  13. Yep that all makes perfect sense today. But we are now facing a recession. Read the first line of my signature please.

    Just 6 years ago my brother bought a 3 bed semi for £72,000 and a friend bought a detached for house for £90,000. Both bought in new developments. How did the builder manage to build these houses and make a profit?

    What will happen to house prices now has more to do with affordability than construction costs. There will be little demand until housing becomes generally affordable again. Affordability will be linked to average wages.

    If you look at the figures for housing starts, they have fallen of a cliff. Developers know that there is no demand. No point in producing something you cannot sell - just like any other business. It does not matter if it is the sheep business or the houses business.

    I agree with the first line of your signature.

    6 years is a long time in the housing industry. House prices are made up many elements we can reduce them to 3 basic: Land, Build Costs and Profit. Land will and has come down, no doubt about that. Six years ago it was probably about £150k per acre. However, I am inclined to think a farmer, with zoned land, faced with selling it for that would sit back and let the next generation deal with it after seeing it go to 10 times that value. But who knows.

    Build cost has changed dramatically. I agree with Traktion in that a lot of developers weren’t concerned with cost control during the boom, but the established builders were and they seen it grow dramatically. Yes sub-contractors pushed up their rates and they will have to pull their horns in again. However the main increases were in red tape and new building regulations. BT, street lighting and the water service, 6 years ago paid the builder to install their services. This wasn’t a profit centre but a cost neutral affair.

    Developers now, not only don’t get paid for it but have to pay the service provider. Swing in cost £5,000 to£7,000 per plot.

    Any junction improvements that the department can think of are now a condition of planning. This is normally £2,000 to £5,000 per plot.

    Archaeology is on average £20k per acre, if they find nothing (a complete rip off).=£1,500 per plot

    Finance for the wait (3 years) to get thro planning (on £50k plot cost) £10,000 per plot.

    In the last 6 years the open space requirement is in place = 15% of site = Land + loss of profit = £10,000 per house

    General increase in materials and labour at 3% over 6 years (it was much higher) = £10,000 per plot

    Red tape (planning costs) Risen in average from £500 per plot to £5,000 = £4,500 per plot

    New building control requirements (down stairs loo, insulation etc) £4,000 per plot

    New building control regulations, yet to hit the ground. (Sustainability, solar heating, air tightness) £20,000 (I kid you not; the UK large firms are going mad about this and may be able to water it down)

    I could go on and on

    Taking the lower figures that comes to an increase in build cost of £47k, before I even add on the £20 for future building regs. In these figures I have only assumed inflation for rising labour and materials which is laughable.

    The point I am making again is we can’t just wind back the clock. All the increases above were swallowed up in the boom – they didn’t hurt. They will now.

    Yes in the current market demand and supply ( and supply of credit) will set the price, but when the current 'new build stock' finally runs out builders will only build at, as a min- break even, to recover the banks money and hopefully move on to some sort of profit. And this is on new land at adjusted prices. A lot will never recover the land value of the latest addition to their current land banks.

    Again I am not attempting to argue for upward house prices as there is absolutely no upward pressure but you can’t assume that in the future builders will build at a loss and even if they can roll back to historical labour and material costs they have a massive 'surcharge' of red-tape and taxes, as listed above to add on.

    So something has to give.

  14. It's called losing money, and it happens quite a lot. For example, last year lambs were worth less ready for slaughter than the cost of raising them. No reason why it shouldn't happen to developers - it already is.

    Yes and I said in my earlier post that builders will have to do whatever is necessary to sell their remaining stock, which means loosing money. The point I was making is that the farmer has to sell the sheep as they wont hang around but the builder will not build new houses to sell at a loss. Therefore once existing stock is got rid of (which will take a while) there will be no new housing. I am not trying to argue for future price increases. I am just saying that I cant see how new housing can be delivered for the price you are hoping, as it would be loss making.

  15. It's already the case that farmers can build retirement homes with in PPS 14.

    Look at the planning applications which indicate a new planning application.

    In the Bellmen area out of 100 applications 1 was for a new home on a brown field site. The rest where continuations of previous approvals.

    Applications The planning system is stuffed with applications and appeals. But very few approvals since PPS 14 came in. Thats why it is referred to as a blanket ban

  16. Becasue it would be more profitable to sit at home and scratch one's bottom... if there is no profit in it, why bother starting?

    Exactly

    The only exception to this would the large one off's in the countryside where the owner goes overboard and if they have the money thats fine.

  17. there will be a loosening of the pps 14 policy because it was badly thought out and we went from a policy that was too lenient to one too restrictive overnight.

    when this happens with the current conditions that will add further downward pressure on prices of land/existing property.

    Florida was a typo which I am sure you occassionally make

    PPS 14 will be relaxed but only in a limited way to allow retiring farmers to hand over the farm dwelling to the 'farming' son and build a retirement bungalow on the land. There will be liminting conditions on the planning permission preventing the 'sell on' of the house, but that will be fun. This additional housing will have little effect on the market as these retiring farmers were not quing up outside UPS or anywhere else.

    There is enough supply 'work in progress' to last quite a while anyway. The fact that little or no foundations have been excavated in the last or next 12 months will take some time to be felt.

  18. sorry!

    why does the market value of a new build HAVE to at least equal the price of the build?

    if i build a house it doesnt have a right that my build and land costs must at least be equal to what it would be worth on the open market.

    it could cost £150k and be worth £125k

    House development is a business that needs positive cash flow and hopefully a profit to operate, why bother otherwise. If you dont understand this u shouldnt be contributing to a very informed forum

  19. It does. I think, everything is pointing to the new equilibrium with average house price somewhere in the 120K-140K range.

    What will give to start building again? Land prices, this is a no-brainer.

    BTW, the resale prices are beginning to give as well lately. Have been signing my new lease today at an EA office, talked a bit about the houses for sale too. A nice semi I liked as up for £195K, and "they would probably accept £175 or so" they said. I'll wait another year, until it's around £150K - that's what I am willing to pay for it. It's a bit above average too.

    Of course, there are still some deluded sellers, but they'll come to their senses - just give them some time.

    I have alowed in my figures for land comming down from £1.5m per acre to £500, and less per acre, in prime areas like lisburn. If it falls further to £300k per acre ( which land owners will not release IMO) this will only save £15k per house.

    Good family housing, going forward simply cant be delivered for the prices you want.

  20. Even in Insight last night a developer was blaming the banks and co-ownership for not giving money to FTBs to buy his properties - he had reduced a little and thought the banks should go a bit further and lend more to them. I think it was Hagan homes the guy was from - he just couldnt see that he would have to reduce further to catch a buyer. It was the same with the developer at Lisnaskea - ghost towns that he had built and I've no doubt people willing to buy at affordable prices but the two couldnt match up. The auctioneer spoke of developers buying marginal land in the back of beyond for 1million an acre and more or less said they were off their heads - its only worth a fraction of that now. They would never be able to build affordable houses at those land prices.

    A number of things are at play here. New build has falling dramatically, compared to existing stock. Perhaps not as much as you would like but it has been dramatic. Just go to PN and list townhouses under say 180k in say Lisburn and compare what's on offer in the new build to the existing stock and think where you would rather buy.

    Some posts claim prices for average house (900 to 1,000 sq feet) needs to fall to 3.5 x av sal (£21k) which works out at £75k. The figure is usually based on average household sal which I believe is £35k which works out at a mortgage of £122k. This is crude and in truth should take into consideration rising costs on fuel, food (&personal debt) etc and should be based on a % of disposable income, which I admit will deflate the above figures.

    To build the standard house it costs the builder about £70 to £80k. Land will come down to £500k, and lower an acre (their are currently neither willing sellers or buyers at that level to establish a fix). At an average of 12 to the acre (standard housing) this will cost £42k per plot plus costs say £45. So before finance and professional fees and overheads the costs are now at say £120k. New building control regs and red tape is expected to increase costs per house by £15 to 20k (Solar panels, insulation, etc) All this plus finance etc will leave the house at £150 plus profit! (Profit - What’s that).

    What can give to make the house cheaper land, wages?

    On top of this we have Margret Ritchie's request for 20% of housing to be handed over to Social/Affordable. This will be the land for the house at nil cost and therefore will have to be added onto the other houses. All road/sewer infrastructure costs will be added onto the costs of development-usually about £10k per plot.

    What has to give?

    The point I am trying to make is this. Yes builders will do what they have to do (or are forced to do) to sell the houses they have build (some on land at over £100k per plot!). They will suffer losses and that’s part of the business cycle.

    Houses have fallen dramatically and those that don’t sell (poorer houses/locations) will fall further. But the point i am making is that these builders will not start new houses to sell at a loss. They simply wont build them and the bank wont force/fund them to do it.

    That will take 12 months to get to that point. The only houses selling at the moment are new build, as builders have reacted faster than the resale market. I cant see how the market can reach the place you say it will. Perhaps repo's, through a forced sale - but no-one welcomes that as there will be a horror story behingd it.

    Hope this makes sense.

    Please discuss.

  21. Well, at least it would make a difference from every new development being named 'Lesley' whatever...

    Everytime I see a sign that goes up on a demolished house site or ex-garage forecourt proclaiming 'Acquired by Lesley' - I begin guessing what the name will be this time...

    Driving down Newtownards road it's Lesley this, Lesley that, Lesley the other - then it's Lesley Exchange 1 & 2 opposite central station - why not change the name of Belfast to Lesleyville!!

    Can the developer not have a bit more imagination???

    The Developer in question calls the schemes after his wife 'Lesley' - true love : :rolleyes:

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