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Cash For Stalled Housing Projects

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http://news.bbc.co.uk/1/hi/business/8170214.stm

£925m, 270 projects, 1/3 towards housing associations, could create 20 000 jobs, not a handout but loans

Only builders who accepted a "realistic current market price" for their properties would be eligible

I wonder what their take on a realistic price is?

£925m doesn't seem like a lot of money any more, I can't see this stoking any house price inflation. I also can't see 20 000 jobs being created either.

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http://news.bbc.co.uk/1/hi/business/8170214.stm

£925m, 270 projects, 1/3 towards housing associations, could create 20 000 jobs, not a handout but loans

I wonder what their take on a realistic price is?

£925m doesn't seem like a lot of money any more, I can't see this stoking any house price inflation. I also can't see 20 000 jobs being created either.

Sounds like a good use of taxpayers cash for a change.

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http://www.ft.com/cms/s/0/90ba9a12-7a1c-11...144feabdc0.html

Price of building tenders driven lower

By David Fickling

Published: July 27 2009 01:13 | Last updated: July 27 2009 01:13

Contract prices on building sites have fallen at their fastest rate since 1991, adding to the pain in a sector that accounted for almost one in six insolvencies in the past three months.

The price of new tenders fell 4.9 per cent in the first three months of the year, leading to a 6.4 per cent total year-on-year drop, according to figures to be released on Monday by the Building Costs Information Service, a division of the Royal Institution of Chartered Surveyors.

Joe Martin, BCIS executive director, said that the decline in demand from cash-strapped developers was causing contractors to fight ever harder for the few remaining tenders, driving prices down.

Activity in the construction sector is projected to fall 16 per cent this year, from £82bn ($135bn) to £69bn, according to the Construction Products Association.

“You get everyone chasing the same amount of work so site rates will start to go down,†said Mr Martin. “People are reporting that contractors who a year or so ago were saying ‘Don’t bother us unless it’s [a contract worth] £5m’ are now knocking on their doors asking for work at £300,000,†he said.

The result is the third successive quarter of tender price deflation since the current downturn hit. The BCIS had previously only recorded two quarters of decline since the early 1990s, when prices fell for three years without let-up.

Most contractors operate on narrow profit margins – the UK’s eight largest listed general contractors have an average operating margin of 2.37 per cent – meaning that any decline in turnover can have a disproportionate effect on profitability.

According to PwC, the professional services firm, there were 726 insolvencies in the construction sector in the three months to the end of June, equivalent to 15 per cent of the total across the economy.

The construction sector, which accounts for about 8 per cent of national income and employment in the UK, saw higher levels of insolvency than manufacturing or retail, PwC said.

There was a slight decline in insolvencies from the first quarter of the year, PwC said, when 831 construction companies entered administration, but the figure was still 50 per cent above the second quarter of 2008.

Contractors have reported developers in many cases delaying the award of contracts to take advantage of anticipated lower prices, a situation that puts further pressure on the sector by starving companies of revenues in the short term.

Even on the 2012 Olympics site at Stratford, east London, project managers are slowing procurement on some contracts in anticipation of lower prices in future, according to John Armitt, chief executive of the Olympic Delivery Authority.

This makes the £925m 'loan' look a bit feeble

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The Guardian reported that

The £925m investment could help fund 22,400 homes – more than 8,600 of which would be affordable – and create 20,000 jobs.

So about two-thirds of them will be unaffordable by their own admission :ph34r:

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The Guardian reported that

So about two-thirds of them will be unaffordable by their own admission :ph34r:

Realistic current market price - I'll believe it when I see it.

My guess is that they'll be affordable under one of the numerous Government schemes.

Affordability is to mortgage lending as excessive lending is to banking. Banks have become too big to fail, and house prices have become too expensive to truly crash.

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here we go, phase two of the recession....builders and contractors carry out work for cut down prices, never to be paid anyway.

COming to an economy near you....after the holidays.

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