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KickThemInThePant

Ft Poll On Likelihood Of Crash

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http://forums.ft.com/2/OpenTopic?a=tpc&s=6...01561#650101561 Edited by KickThemInThePant

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We don't all live in the South East

by Simon  13 Aug 2005  09:30 PM

Sorry, but here in Staffs we have never had London style prices and houses remain affordable.

There is absolutely no way that there could be a crash here because building work just costs too much money.

My detached house is "worth" about £150k. My buildings insurance is linked directly to rebuild costs and unless my plot of land can go down from it's current value of about £20k (the difference between rebuild and "value") then I don't see how there can be a crash here.

I suppose builders might cut their costs and supplies such as bricks, cement, piping etc could all come down to - but so might pigs fly.

Any correction can only be a local thing, but here in the Midlands it's not realistic

Since when has the market value of a property been directly linked to its rebuild cost?

A small simply constructed house in a "nice" area is very likely to have a market value in excess of what it cost to build. With a larger, older house in a less desirable area the opposite is sometimes the case.

For example my own place, a large victorian house in Hull, has a rebuild cost of roughly double its market value. When I bought it 5 years ago the rebuild cost was about 3-4 times its market value!

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Since when has the market value of a property been directly linked to its rebuild cost?

A small simply constructed house in a "nice" area is very likely to have a market value in excess of what it cost to build. With a larger, older house in a less desirable area the opposite is sometimes the case.

For example my own place, a large victorian house in Hull, has a rebuild cost of roughly double its market value. When I bought it 5 years ago the rebuild cost was about 3-4 times its market value!

It's a bit like saying my old banger car is worth £2000 because it needs £2000 worth of repairs to pass its MoT. His argument smacks a bit of "they wouldn't allow it to happen".

He also seems to be focusing on newbuilds if he's talking about building costs. In reality, what would happen should prices drop such that it's uneconomical for housebuilders to build is that they simply won't build any. This in itself is classic supply and demand in action is it not?

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Since when has the market value of a property been directly linked to its rebuild cost?

I too am from Staffs and his £150 detached would have cost around £80k five years ago. So his argument goes out of the window. So he thinks it now costs 100% more to rebuld a house on the same plot of land now as it did 5 years ago?

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  • 334 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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