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mikthe20

Land Values Down 41% In Uk Says Builder

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Not sure if this has been posted before. Might be technical reasons why this builder is writing down values so dramatically but perhaps, just perhaps, they are doing so because they have proper accountants and auditors.

(found story on Renegade Economist)

McInerney's Irish land value halved

Monday, 31 August 2009 15:54

House building company McInerney has estimated that the total value of its property in Ireland has more than halved since mid-2008.

In its first-half financial results statement, the company said it had written another €156m off the value of its land bank in Ireland and the UK, having written down €110m at the time of its 2008 results.

Since mid-2008, it has lowered the estimated value of its Irish land to an average of €26,000 per plot, down 52%. It estimates that its UK land has fallen 41% in value.

McInerney reported a pre-tax loss before exceptional items of €12.8m for the six months, compared with a loss of €22m in the same period last year.

The company said there had been some signs of price stability and a steady pattern of sales at a low level in the UK.

However in Ireland, McInerney said prices continued to fall with sales since May being 'particularly weak'.

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Since mid-2008, it has lowered the estimated value of its Irish land to an average of €26,000 per plot, down 52%. It estimates that its UK land has fallen 41% in value.

McInerney reported a pre-tax loss before exceptional items of €12.8m for the six months, compared with a loss of €22m in the same period last year.

The 'land price crash' (and the developers response) was key factor in HPC in USA and Spain

Developers holding large land banks struggled to stay solvent in the face of declining land values; as these reductions fall straight onto their capital balance sheet

Some developers were therefore forced into 'fire sales' of new builds to provide the cash flow to stay solvent

Others fast-tracked developments in order to increase the value of the land already on their books, resulting in a surge of supply into a falling market

Edited by Sonic the Hedge Fund

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The 'land price crash' (and the developers response) was key factor in HPC in USA and Spain

Developers holding large land banks struggled to stay solvent in the face of declining land values; as these reductions fall straight onto their capital balance sheet

Some developers were therefore forced into 'fire sales' of new builds to provide the cash flow to stay solvent

Others fast-tracked developments in order to increase the value of the land already on their books, resulting in a surge of supply into a falling market

Yep, I suspect something similar will happen here when the right-downs spread. Land price crash always precursor to house price crash.

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Land values were down 50% a few months ago according to the valuation office.

This sound more like an like an uptick to me.

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well i thought they said that the house prices went up because of the price of land so if the land values are down 40% then why aren't the houses down the same amount ?

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Others fast-tracked developments in order to increase the value of the land already on their books, resulting in a surge of supply into a falling market

Spot-on. Exactly what I'm seeing near me in London, the builders are going crazy to complete every inch of development they can.

In many cases when they can't sell the new flats they are being offloaded onto housing associations and local authority who fill them with newly arrived migrants with young children (top of most need list). This has totally overwhelmed the local health and school services, my wife has found local GP surgery appointments have gone from 2 days notice to 2.5 weeks.

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