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Tired of Waiting

Q: When And Where Building Plots Become Worthless?

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Question: When and where building plots become worthless?

Answer: When and where building costs alone = house market value.

According to this table linked below building costs seem to be around £100/sq.ft., or £1,100/sq.m.

"Guide to building costs", LINK: http://www.homebuilding.co.uk/files/ascent-homebuilding/Costs%20Feb%2011_Layout%202.pdf

Only in very few parts of the country house prices may be getting down to this level already. But not in good areas, and not here in the south though. Prices around here are usually between £2k and £3k / sq.m. I find hard to believe that prices in good areas around here will ever be this low - £1,000/sq.m.

Nevertheless, I am quite sure building plots will get much cheaper.

But when though? Logically they should have fallen by much more already, but the problem is that many potential sellers still believe these "weak" market is a temporary thing, and are still holding their properties until the market goes "back up to 'normal' "... How long until sellers get it?? How many years? 1, 2, 5?!

Edited by Tired of Waiting

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If house prices are lower, then the people building the houses won't need as much income to survive. They can therefore charge less for their services.

Similarly, the suppliers of the building materieals, when faced with cheaper overheads (rent, staff costs) will be able to offer the materials for less cost.

Thus the overall cost for a house will also reduce. win win all round.

How do you think houses ever cost less than they did now?

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If house prices are lower, then the people building the houses won't need as much income to survive. They can therefore charge less for their services.

Similarly, the suppliers of the building materieals, when faced with cheaper overheads (rent, staff costs) will be able to offer the materials for less cost.

Thus the overall cost for a house will also reduce. win win all round.

How do you think houses ever cost less than they did now?

Sure, but down here, near the south coast, the main cost is still the building plot - at least in good neighbourhoods. Recently a small plot with consent for a pair of small semis was being sold for £200k.

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Sure, but down here, near the south coast, the main cost is still the building plot - at least in good neighbourhoods. Recently a small plot with consent for a pair of small semis was being sold for £200k.

Then methinks the buyers of that plot are going to get their fingers severely burnt.

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Question: When and where building plots become worthless?

Answer: When and where building costs alone = house market value.

Actually I find hard to believe that prices in good areas around here will ever be this low - £1,000/sq.m.

Nevertheless, I am quite sure building plots will get much cheaper.

About 20 years ago land, even in good parts of London, became effectively worthless. The rebuilding cost for my first house was about £100K, yet it only cost £80K.

Property developers tended to create small blocks of flats or split plots in half in order to make the land profitable. We have a few examples of this near us. Also a lot of the work done at that time was not as good as it could have been due to the low profit margin.

The plots will become cheaper, but I can't see them being given away.

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Then methinks the buyers of that plot are going to get their fingers severely burnt.

Semis in good areas around here are still being sold for around £300k. Terraces for around £200k. House prices in good parts of the south / south-east are still near peak levels.

Actually this reminds me that in this forum we constantly have huge misunderstandings between posters caused by the fact that they are living in different parts of the country, with very different realities, but they forgot to clarify that to each other. It happens a lot in the debates about "shortage" or not... Yes we have an acute shortage in the south, but not in the north, apparently.

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Semis in good areas around here are still being sold for around £300k. Terraces for around £200k. House prices in good parts of the south / south-east are still near peak levels.

Actually this reminds me that in this forum we constantly have huge misunderstandings between posters caused by the fact that they are living in different parts of the country, with very different realities, but they forgot to clarify that to each other. It happens a lot in the debates about "shortage" or not... Yes we have an acute shortage in the south, but not in the north, apparently.

Apologies, I was posting with the assumption that you were saying - (paraphrasing) "house prices are already down to the bare cost of the buiilding costs already".

Building costst can also vary from region to region.

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About 20 years ago land, even in good parts of London, became effectively worthless. The rebuilding cost for my first house was about £100K, yet it only cost £80K.

Property developers tended to create small blocks of flats or split plots in half in order to make the land profitable. We have a few examples of this near us. Also a lot of the work done at that time was not as good as it could have been due to the low profit margin.

Thanks for that 91, it confirms the "theory".

The plots will become cheaper, but I can't see them being given away.

Yes, I agree. Though just cheaper would be good enough for me. :) And we just need a very small plot really, even a terrace would do. It just has to be in a safe, peaceful area. That is all.

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Apologies, I was posting with the assumption that you were saying - (paraphrasing) "house prices are already down to the bare cost of the buiilding costs already".

No probs. My fault for not being clear in the OP. I'll edit it a little.

Building costst can also vary from region to region.

Yes.

This table is very good, it includes regional variations too:

http://www.homebuilding.co.uk/files/ascent-homebuilding/Costs%20Feb%2011_Layout%202.pdf

Edited by Tired of Waiting

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House prices in good parts of the south / south-east are still near peak levels.

... Yes we have an acute shortage in the south, but not in the north, apparently.

The asking prices are, but there aren't too many sales.

There is a shortage of certain types of property, namely family homes. 1/2 bed flats are plentiful, and so too are smaller houses. The jump in prices between a 2 bed and a 3 bed is a lot and also between 3 bed and 4 bed. After that it tends to plateau.

Some people buy upstairs/downstairs flat in order to get a house. If flats are less than £250K, the total cost can be significantly cheaper.

http://www.guardian.co.uk/money/2007/jul/29/observercashsection.theobserver5

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Yes, I agree. Though just cheaper would be good enough for me. :) And we just need a very small plot really, even a terrace would do. It just has to be in a safe, peaceful area. That is all.

With a small building plot you could always put a temporary building on it I suppose.

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"Petrocelli" ?

Mid -70s TV series, occasionally repeated on daytime TV to amuse students....

Tony Petrocelli was an Italian-American Harvard-educated lawyer who grew up in South Boston and gave up the big money and frenetic pace of major-metropolitan life to practice in a sleepy city in the American Southwest called San Remo (filmed in Tucson, Arizona). He and his wife Maggie lived in a trailer in the country while waiting for their new house to be built, and travelled around in a beat-up old pickup truck...

He never finished building the house :)

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Mid -70s TV series, occasionally repeated on daytime TV to amuse students....

Tony Petrocelli was an Italian-American Harvard-educated lawyer who grew up in South Boston and gave up the big money and frenetic pace of major-metropolitan life to practice in a sleepy city in the American Southwest called San Remo (filmed in Tucson, Arizona). He and his wife Maggie lived in a trailer in the country while waiting for their new house to be built, and travelled around in a beat-up old pickup truck...

He never finished building the house :)

Not just that,in some later episodes the house was at an earlier stage of development.

I am interested in this as I currently have a project in for planning.I think it only stacks up if you have plots in a desirable area.I am working on £1000 per sq metre, roughly £180k to build a 180sq m/2000 sq ft house.

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Mid -70s TV series, occasionally repeated on daytime TV to amuse students....

Tony Petrocelli was an Italian-American Harvard-educated lawyer who grew up in South Boston and gave up the big money and frenetic pace of major-metropolitan life to practice in a sleepy city in the American Southwest called San Remo (filmed in Tucson, Arizona). He and his wife Maggie lived in a trailer in the country while waiting for their new house to be built, and travelled around in a beat-up old pickup truck...

He never finished building the house :)

I see. Thanks.

Though in our case the main barrier is at the start of the process: plots with planning permission, very rare and therefore very expensive in Britain - well, particularly here in the south.

Edited by Tired of Waiting

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Not just that,in some later episodes the house was at an earlier stage of development.

I am interested in this as I currently have a project in for planning.I think it only stacks up if you have plots in a desirable area.I am working on £1000 per sq metre, roughly £180k to build a 180sq m/2000 sq ft house.

Well done.

All the best.

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Question: When and where building plots become worthless?

Answer: When and where building costs alone = house market value.

According to this table linked below building costs seem to be around £100/sq.ft., or £1,100/sq.m.

"Guide to building costs", LINK: http://www.homebuilding.co.uk/files/ascent-homebuilding/Costs%20Feb%2011_Layout%202.pdf

(...)

UPDATE:

http://www.midasletter.com/index.php/arizona-land-sells-for-8-of-2006-purchase-price/

Arizona Land Sells for 8% of 2006 Purchase Price

by admin on May 30, 2011

By John Gittelsohn

Bloomberg

May 30, 2011

A 10,200-acre (4,100-hectare) desert site in Arizona sold for $32.5 million this week, five years after a group with investors including the California Public Employees’ Retirement System paid $400 million for the land.

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