Friday, July 30, 2010
No more rabbit hutch apartments
U.K. homebuilders reacted to the financial crisis by switching from apartments to single-family homes. The move away from apartments, combined with a 60 percent drop in land prices, may lift operating profit margins in the industry. â€œHouses donâ€™t lock up as much capital as apartments, as you can build them in phases so it doesnâ€™t tie up as much work in progress.â€ New houses tend to fetch higher prices than secondhand ones, while thatâ€™s no longer the case for apartments. A decade ago, the premium for new apartments was 55 percent. It remains at about 15 percent for new houses. "Houses are cheaper to build as you need less steel frames and things, and itâ€™s less problematic," said an analyst at Panmure Gordon. "More importantly, people want to live in houses and not flats."