Saturday, July 4, 2009

Systemic problems for housebuilders in todays market

Housebuilders have not made it to sunlit uplands yet

An examination of the problems facing housebuilders today. Land banks that no longer appreciate in value due to deflation, lack of innovative building techniques, the requirement for less capital intensive projects, relatively high material costs and environmental standards overheads are just some of the issues builders need to address: "The development model on which housebuilders’ returns have been based for the past half a century is badly damaged, possibly broken. In short it has relied on buying and holding land, adding value through securing planning consent, keeping a lid on building costs (largely materials and labour) and looking to house price inflation to lift operating margins."

Posted by quiet guy @ 05:59 PM (798 views)
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2 thoughts on “Systemic problems for housebuilders in todays market

  • As the man says,developers are just dealers in land price inflation.They will sit round till the quantitative easing translates into increased land prices ( as intended), unless we have LVT – like now !

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  • Underwriting the value of the land by the goverment on the builders books would restart building if hardwork is intended and not waiting for land prices to rise.

    Just waiting for Mr. Cameron as per http://www.independent.co.uk/news/uk/politics/cameron-challenges-tories-on-housing-471492.html he said in 2006 that the supply of new housing must be increased to bring down the price of homes for first-time buyers.

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