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macfarlan

Did I Hear That Right? Housebuilder Makes Millions Of £S Profit From Building 27 Houses?

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Listening to Radio 4 this morning, an interview with a housebuilder reporting massively increased profits.

Interviewer did a double take then totally ignored the statement he'd just made.

Granted, it seemed like the the feature was really offering the guy a platform to comment on how to build more houses and fix the 'lack of supply' problems. But the real story was ignored in my opinion.

I'll update with a link later...

Edit to add link to interview with Steve morgan of Redrow here (starts at 1h 19m), The quote is basically as follows; "We're building a lot more homes, 27 more than last year!"

Pre tax profits up 91% to £132 million

Edited by macfarlan

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The profits are massively up but how many extra houses have been built this year compared to the last few years. Likely few if any.

Next there'll be some political crony on the radio about how it'll take time for the benefits of Help to Sell to feed through in numbers of new houses built - benefits this year, next year, sometime, never?

Edited by billybong

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HTB part I is a necessary evil IMO to get the builders to build on land they've banked at peak prices (part II is just pure evil though). Lots of building activity round where I am.

Of course, it would have been best if the developers had gone bankrupt for partaking in a speculative asset bubble and the land sold on at lower prices to new companies (employing mostly the same workforce) who would have built on it.

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BBC Business Feed


Redrow says a large number of its Help to Buy clients were first time buyers and over half were in the north of England. It says its order book is looking plump - up 85% on last year. Business Live has been debating Redrow's building style. Ease of upkeep of the wooden bits has excited debate.

1.

REDROW RESULTS 07:21:

Housebuilder Redrow's results are here. The usual tale of rising prices and the government's Help to Buy scheme. Redrow reports a 13% increase in the average selling price to £239,500, record group revenues and record pre-tax profits (almost doubling). Help To Buy provided 35% of private completions.

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It was 27 ESTATES.

No, that wasn't what was said. The Chairman of the housebuilder confirmed it was 27 more legal completions (on individual houses) than last year.

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HTB part I is a necessary evil IMO to get the builders to build on land they've banked at peak prices (part II is just pure evil though). Lots of building activity round where I am.

Of course, it would have been best if the developers had gone bankrupt for partaking in a speculative asset bubble and the land sold on at lower prices to new companies (employing mostly the same workforce) who would have built on it.

Capitalism is an almost antithetical concept for dirigistes like Dave and George. Always better to let the State decide.

Edited by zugzwang

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Lots of building in many places but it's likely that most of it was being considered and being given planning permission well before Help to Sell officially came into play.

Except that perhaps the big builders said look we have the permission to build now but we're not going to build unless you do something to up our profits by say another 20%?

Of course Osborne (et al) would be only too keen to introduce Help to Sell and soon afterwards (last year on 9 September) make a keynote speech about "the economy" (including Help to Sell) to an audience including property developers at 1 Commercial Street a property development building site.


https://

www.gov.uk/government/speeches/chancellor-speech-on-the-economy

Edited by billybong

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Redrow had a 27% increase in legal completions, from 2,827 to 3,597.

Interesting factoid from the Chairman's statement:

"The average plot cost has risen to £63,000 (2013: £57,000) primarily as a result of a higher percentage of land being in the south. This figure, however, represents 23% of our current average selling price, broadly in line with previous years."

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Redrow had a 27% increase in legal completions, from 2,827 to 3,597.

Interesting factoid from the Chairman's statement:

"The average plot cost has risen to £63,000 (2013: £57,000) primarily as a result of a higher percentage of land being in the south. This figure, however, represents 23% of our current average selling price, broadly in line with previous years."

Looked at some building land in France the other week, 10 Euro a sq m. There were terrain a batir and lotissements (commune ones at around 25 Euro sq m for 500 sq m plus) all over the place. Pick the town or villiage where you want to live and away you go. Mind you other regs are tricky but then so are Uk bulding regs now.

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Redrow had a 27% increase in legal completions, from 2,827 to 3,597.

Interesting factoid from the Chairman's statement:

"The average plot cost has risen to £63,000 (2013: £57,000) primarily as a result of a higher percentage of land being in the south. This figure, however, represents 23% of our current average selling price, broadly in line with previous years."

Redrow had an increase in completions to June but as a whole for 2013 UK completions went down to 110,000 (apparently).

If the 27% is across the board (unlikely?) for 2014 that would make about 140,000 completions and still well short of the 200,000 that's claimed to be going to be Labour's target to meet the apparent shortage.

It'll be interesting to see how many new houses are claimed to have been completed in the UK for the full 2014.

The average plot cost is interesting.

Edited by billybong

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"The average plot cost has risen to £63,000 (2013: £57,000) primarily as a result of a higher percentage of land being in the south. This figure, however, represents 23% of our current average selling price, broadly in line with previous years."

So that would make an average selling price of about £274,000.

Apparently the UK's average wage is about £26,000 so with 2 wages that gives £52,000 - a multiple of about 5.3.

Giving 'em away.

Edited by billybong

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Looked at some building land in France the other week, 10 Euro a sq m. There were terrain a batir and lotissements (commune ones at around 25 Euro sq m for 500 sq m plus) all over the place. Pick the town or villiage where you want to live and away you go. Mind you other regs are tricky but then so are Uk bulding regs now.

I just looked for a plot in a beautiful village near the Spanish boarder and found one with stunning views and permission for a 250m2 build. Priced at 150k. Meanwhile after a year of searching I cannot find one within 10 miles of Cambridge big enough for a decent sized house for under £400k!

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Redrow had an increase in completions to June but as a whole for 2013 UK completions went down to 110,000 (apparently).

If the 27% is across the board (unlikely?) for 2014 that would make about 140,000 completions and still well short of the 200,000 that's claimed to be going to be Labour's target to meet the apparent shortage.

It'll be interesting to see how many new houses are claimed to have been completed in the UK for the full 2014.

DCLG published house building stats for Q2 a couple of weeks ago (England only). The rolling annual numbers show 114,400 completions in the year to June 2014, and 137,800 starts.

HousebuildingQ22014.gif

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/345947/House_Building_Release_-_June_Qtr_2014.pdf

Tables 2a and 2b give the private/housing association/local authority breakdown.

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Local council here actually gave a loan from taxpayers money to a developer going bust in 2008. The development was going to go to auction, people would have picked it up at firesale prices and got some family homes out of it. As it was they just didn't bother finishing it until last year.

How nice of the council to keep half a dozen homes off the market for half a decade.

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