Saturday, July 4, 2009
Systemic problems for housebuilders in todays market
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 housebuildersâ€™ 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."