New build - The Invisible Hand That Keeps On Taking

[70PC]

"In the latest figures on UK house prices, new builds are particularly eye-catching. The price for such homes has increased by 17% in the past year, while the average price for existing homes cooled by 2.4%.

The Invisible Hand That Keeps On Taking, we showed that in 2005 these firms paid out 16% of pre-tax profits as dividends, amounting to just over £5,000 per home built. In 2022 their dividends were 47% of profits or £22,000 per home.

Large housebuilders have been able to pay historically unprecedented levels of dividends through a combination of increasing house prices and keeping certain costs down (for instance on land). Evidence suggests some builders have actually been reducing their land costs over time."

https://theconversation.com/new-house-prices-are-rising-rapidly-despite-a-flat-market-we-need-to-diversify-what-we-build-and-who-builds-it-226417

[The Angry Capitalist]

5 minutes ago, 70PC said:

"In the latest figures on UK house prices, new builds are particularly eye-catching. The price for such homes has increased by 17% in the past year, while the average price for existing homes cooled by 2.4%.

The Invisible Hand That Keeps On Taking, we showed that in 2005 these firms paid out 16% of pre-tax profits as dividends, amounting to just over £5,000 per home built. In 2022 their dividends were 47% of profits or £22,000 per home.

Large housebuilders have been able to pay historically unprecedented levels of dividends through a combination of increasing house prices and keeping certain costs down (for instance on land). Evidence suggests some builders have actually been reducing their land costs over time."

https://theconversation.com/new-house-prices-are-rising-rapidly-despite-a-flat-market-we-need-to-diversify-what-we-build-and-who-builds-it-226417

That surprises me.

Didn't HTB end in 2023?

One thinks the data for 2024 new build sales in early 2025 will paint a different picture.

[Locke]

They have a monopoly via planning permission. Of course they can charge whatever the fck they want.

It cracks me up that so many of yous cry about "We need the government stop monopolies!" when the only examples of monopolies you can actually point to are the ones the government creates and enforces, in this case through planning permission.

[zugzwang]

6 minutes ago, Locke said:

They have a monopoly via planning permission. Of course they can charge whatever the fck they want.

It cracks me up that so many of yous cry about "We need the government stop monopolies!" when the only examples of monopolies you can actually point to are the ones the government creates and enforces, in this case through planning permission.

Flaring nonsense.

https://en.wikipedia.org/wiki/Natural_monopoly

A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production. In that case, it is very probable that a company (monopoly) or minimal number of companies (oligopoly) will form, providing all or most relevant products and/or services. This frequently occurs in industries where capital costs predominate, creating large economies of scale about the size of the market; examples include public utilities such as water services, electricity, telecommunications, mail, etc.^[1] Natural monopolies were recognized as potential sources of market failure as early as the 19th century; John Stuart Mill advocated government regulation to make them serve the public good.

[Locke]

16 minutes ago, zugzwang said:

Flaring nonsense.

https://en.wikipedia.org/wiki/Natural_monopoly

A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production. In that case, it is very probable that a company (monopoly) or minimal number of companies (oligopoly) will form, providing all or most relevant products and/or services. This frequently occurs in industries where capital costs predominate, creating large economies of scale about the size of the market; examples include public utilities such as water services, electricity, telecommunications, mail, etc.^[1] Natural monopolies were recognized as potential sources of market failure as early as the 19th century; John Stuart Mill advocated government regulation to make them serve the public good.

Would you describe house building as a natural monopoly?

[spxy]

20 minutes ago, zugzwang said:

Flaring nonsense.

https://en.wikipedia.org/wiki/Natural_monopoly

A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production. In that case, it is very probable that a company (monopoly) or minimal number of companies (oligopoly) will form, providing all or most relevant products and/or services. This frequently occurs in industries where capital costs predominate, creating large economies of scale about the size of the market; examples include public utilities such as water services, electricity, telecommunications, mail, etc.^[1] Natural monopolies were recognized as potential sources of market failure as early as the 19th century; John Stuart Mill advocated government regulation to make them serve the public good.

Funny how this natural monopoly doesn't exist in other countries

[Sackboii]

2 hours ago, 70PC said:

"In the latest figures on UK house prices, new builds are particularly eye-catching. The price for such homes has increased by 17% in the past year, while the average price for existing homes cooled by 2.4%.

The Invisible Hand That Keeps On Taking, we showed that in 2005 these firms paid out 16% of pre-tax profits as dividends, amounting to just over £5,000 per home built. In 2022 their dividends were 47% of profits or £22,000 per home.

Large housebuilders have been able to pay historically unprecedented levels of dividends through a combination of increasing house prices and keeping certain costs down (for instance on land). Evidence suggests some builders have actually been reducing their land costs over time."

https://theconversation.com/new-house-prices-are-rising-rapidly-despite-a-flat-market-we-need-to-diversify-what-we-build-and-who-builds-it-226417

And it will continue whilst people continue to pay a premium for new-builds. Take these two properties, next door to each other.

The first a new-build:

Second the 'used' property:

The new-build was reserved/sold within 2 weeks of going on the market, the 'used' property has been on the market for 6 weeks and not a single enquiry or viewing. I know the owner.

WTF ?

Edited March 26 by Sackboii

[70PC]

24 minutes ago, Sackboii said:

And it will continue whilst people continue to pay a premium for new-builds. Take these two properties, next door to each other.

The first a new-build:

Second the 'used' property:

The new-build was reserved/sold within 2 weeks of going on the market, the 'used' property has been on the market for 6 weeks and not a single enquiry or viewing. I know the owner.

WTF ?

Builders use underhand tactics like backhanders to lenders to cover 2 year fixed mortgages at subsidised rates. The builders rinse the customer with inflated prices. Lenders rinse the customer with long loans which double the cost of the property. HMG shows little concern.   

[Sackboii]

6 minutes ago, 70PC said:

Builders use underhand tactics like backhanders to lenders to cover 2 year fixed mortgages at subsidised rates. The builders rinse the customer with inflated prices. Lenders rinse the customer with long loans which double the cost of the property. HMG shows little concern.   

Yes. Anything to keep the headline price high.

Rightmove and their hoards of loyal EA's also do the same. Initial asking prices are keep high by EA's to feed their laughable 'house price index' after which they get reduced after a few weeks so they fall out of the figures.

 

[sell2rent]

Profit margins don’t seem unusual.

[fellow]

3 hours ago, The Angry Capitalist said:

That surprises me.

Didn't HTB end in 2023?

One thinks the data for 2024 new build sales in early 2025 will paint a different picture.

Averages can be misleading. A higher average new build transaction price does not necessarily mean that new build prices are rising. It could be that a higher proportion of high value new builds are selling whilst more of the lower value houses remain unsold.

The idea that new build prices have risen 17% YoY is just laughable at a time when builders have been cutting back construction and their profits have been falling.

Edited March 26 by fellow

[The Angry Capitalist]

3 hours ago, fellow said:

Averages can be misleading. A higher average new build transaction price does not necessarily mean that new build prices are rising. It could be that a higher proportion of high value new builds are selling whilst more of the lower value houses remain unsold.

The idea that new build prices have risen 17% YoY is just laughable at a time when builders have been cutting back construction and their profits have been falling.

Good point.

[nero120]

3 hours ago, fellow said:

Averages can be misleading. A higher average new build transaction price does not necessarily mean that new build prices are rising. It could be that a higher proportion of high value new builds are selling whilst more of the lower value houses remain unsold.

The idea that new build prices have risen 17% YoY is just laughable at a time when builders have been cutting back construction and their profits have been falling.

Absolutely! This country is a swamp of lies.

[Dyson Fury]

7 hours ago, Sackboii said:

And it will continue whilst people continue to pay a premium for new-builds. Take these two properties, next door to each other.

How old is the "used" property?  One advantage of buying a new-build before it is completed is the opportunity to choose your own range of kitchen fittings, colour of carpets, etc.  Many people value that, and will pay a price premium compared to buying the second-hand property in someone else's choice of decor, with carpets that have been walked on for two years and kitchen units that are showing signs of wear and tear.  Is that worth an extra £30,000? Who can say.

[Sackboii]

Just now, Dyson Fury said:

How old is the "used" property?  One advantage of buying a new-build before it is completed is the opportunity to choose your own range of kitchen fittings, colour of carpets, etc.  Many people value that, and will pay a price premium compared to buying the second-hand property in someone else's choice of decor, with carpets that have been walked on for two years and kitchen units that are showing signs of wear and tear.  Is that worth an extra £30,000? Who can say.

2 years old.

[zugzwang]

8 hours ago, Locke said:

Would you describe house building as a natural monopoly?

 

Investigation into suspected anti-competitive conduct by housebuilders

The CMA is investigating suspected exchanges of competitively sensitive information by 8 housebuilders in Great Britain under the Competition Act 1998.

https://www.gov.uk/cma-cases/investigation-into-suspected-anti-competitive-conduct-by-housebuilders

 

Also,

'... the only examples of monopolies you can actually point to are the ones the government creates and enforces...'

Categorically untrue.

[Lagarde's Drift]

2 hours ago, Dyson Fury said:

How old is the "used" property?  One advantage of buying a new-build before it is completed is the opportunity to choose your own range of kitchen fittings, colour of carpets, etc.  Many people value that, and will pay a price premium compared to buying the second-hand property in someone else's choice of decor, with carpets that have been walked on for two years and kitchen units that are showing signs of wear and tear.  Is that worth an extra £30,000? Who can say.

It is, if the housebuilder fits quality stuff well. Another premium which may be overlooked is not being in a chain for a lot of FTBers who are just renting. They just move in although dependent on completion. 

The slightly used houses nearby will equally have been overpriced poor quality shit boxes and will often show significant wear and tear already. Some might even have stained exteriors, I've seen some new builds without guttering lol.

Also when you're moving to new build you always convince yourself that there won't be scummy neighbours but you might be unlucky.... then you try to sell within 2 years and people smell something off.

 

Edited March 26 by Lagarde's Drift

[Social Justice League]

How many people buy new builds without a mortgage?

Not enough to fill a phone box?

Thick, poor peasants get a lifetime of debt in return for a pish new build.  A country full of idiotic filth is what we now have.

[Lucky Larry]

Things getting so desperate in the new build market they're throwing in a free lamp post . This one in South Shields for £235k comes with the additional benefit of smelling of dog piss

[Lagarde's Drift]

Just now, Lucky Larry said:

Things getting so desperate in the new build market they're throwing in a free lamp post . This one in South Shields for £235k comes with the additional benefit of smelling of dog piss

 

Is that true new build or is it some greedy extension of a house?

[Lucky Larry]

Just now, Lagarde's Drift said:

Is that true new build or is it some greedy extension of a house?

Not sure tbh 

[Lucky Larry]

4 minutes ago, Lagarde's Drift said:

Is that true new build or is it some greedy extension of a house?

this is a definite new build with similar issue

Home 'with excellent transport links' has bus stop blocking front door | Metro News

[Lucky Larry]

[Wampus Cat]

On 3/26/2024 at 6:29 PM, Lucky Larry said:

Things getting so desperate in the new build market they're throwing in a free lamp post . This one in South Shields for £235k comes with the additional benefit of smelling of dog piss

The number is 101B - this additional letter hints at the property being a sh1ty flat conversion of part of an existing property. The lamp post was probably there before the wall/window became a front door.

[Locke]

On 26/03/2024 at 17:51, zugzwang said:

 

Investigation into suspected anti-competitive conduct by housebuilders

The CMA is investigating suspected exchanges of competitively sensitive information by 8 housebuilders in Great Britain under the Competition Act 1998.

https://www.gov.uk/cma-cases/investigation-into-suspected-anti-competitive-conduct-by-housebuilders

 

What point are you trying to make?

Quote

Also,

'... the only examples of monopolies you can actually point to are the ones the government creates and enforces...'

Categorically untrue.

Ok, so show me one.