Saturday, June 28, 2008

Residential land market down by 25% so far in 2008

Berkeley Group calls bottom by buying land

"Although the housebuilder stressed there could be further price falls to come it said it was starting to see value in the market after 25pc falls in the price of land so far this year." This is a statistic they have been keeping to themselves!

Posted by wdbeast @ 10:06 AM (1033 views)
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8 thoughts on “Residential land market down by 25% so far in 2008

  • Time to start shorting Berkeley very heavily then…

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  • When you look at their share price over the last year it becomes really easy to see why they are making one last desperate bid to talk the market up gaain:

    Berkeley Gp HldgsUK:BKG (LSE) 694.00Change:+31.00+4.68%Volume:1.24M 4:35pm 6/27/2008

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  • What???? A building group saying the housing market is peachy from here on. Wow. In other news Gordon Brown says that a recent poll; conducted by himself, shows 100% support for his leadership of the UK.

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  • Just heard on moneybox on Radio4 that the biggest land banking firm is being wound up.

    and the investors expect to get 2p in a pound…

    A fool and his money soon part.

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  • mark wadsworth says:

    He’s clearly lying or mad.

    Land values = house prices minus re/build costs.

    At top of market last year, the cost of an average house was about 50/50 – £100k for the land and £100k for rebuild costs.

    Ergo, if house price fall by 30% from peak (and then some!) then as rebuild costs stay the same, land values fall by 60%.

    Obviously, if my 50/50 estimate is wrong then the effect on land values will be reduced or magnified acordingly.

    I did a chart showing land values since 1983 on my blog (comparing notional and actual land values – they were pretty much in line) values fell by about two-thirds in the 1990s crash and have since gone up five-fold.

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  • @mark wadsworth, your calculations are wrong

    The average house (worth £200k) sits on land worth £20k tops. rebuild costs for such a house are indeed about £100k. That leaves £80k to spent in order to persuade locals and councils to grant planning permission.

    It is the planning permission that is scarce, not the land.

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  • Aren’t they the most profitable builder?

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  • Mark, the Times has fingered you as a professional troublemaker.

    http://www.timesonline.co.uk/tol/news/politics/article4231174.ece

    The left-wing “journalist” and professional agitator Marc Wadsworth has struck the first blow against the new mayor of London, Boris Johnson – and has done so on territory upon which Boris felt himself, perhaps rightly, to be vulnerable.

    Will we all have to watch your potentially leading/loaded questions and comments?

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