Saturday, Mar 14, 2015

Because land banking is easier than building

Guardian: Decline in UK housebuilding accelerates drop-off in construction activity

The ONS has reported a decline in housebuilding in January: "Construction industry output in January was down 2.6% on the previous month, dragged down by the decrease in housebuilding, the Office for National Statistics said. Within the figures there was a smaller decrease in infrastructure building, of 2.4%, thanks to major projects such as Crossrail. A sharp fall in the number of mortgage approvals, especially for first-time buyers, was blamed for the decline, as homebuyers found themselves constrained by more stringent lending rules. Housebuilders, wary of creating a surplus of homes and triggering a price fall, have halted some developments until the economic picture becomes clearer." What will it take to get us building more homes?

Posted by quiet guy @ 08:24 PM (7203 views)
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21 Comments

1. khards said...

The Condems won't like that because it will impact the mark-to-make-believe borrowing figures. Wouldn't surprise me if they ordered fat man pickles to make an announcement about taxing unused land banks.

Saturday, March 14, 2015 08:53PM Report Comment
 

2. stillthinking said...

People are not going to build into a falling market. What it would take is either the bottom of the market to be reached or price stability.

When the government states that 200,000 houses are needed each year, they neglect to say that of course these are the housing needs of the poorest i.e. those who cannot afford to build even if planning permission was available. Given that there is already wage inflation in the construction industry, and also given that we as a nation cannot rely on building to existing infrastructure anymore, and also the dire financial straits of government, imo there is nothing to be done apart from watch the situation worsen. Even if the will were there, there isn't the capacity or the finance to build, and clearly the private sector can't be tempted into mass housebuilding and pushing their own prices down.

Sunday, March 15, 2015 01:38PM Report Comment
 

3. taffee said...

Stop right to buy and build council houses should solve the problem along with btl taxation..should get entry of
Supply then prices will fall and builders can buy cheap land(assuming they survive the slump

Not only is propping up a bubble irresponsible our banks have been lending into it...what could go wrong!

Sunday, March 15, 2015 02:05PM Report Comment
 

4. taffee said...

Meant plenty of supply of course

Sunday, March 15, 2015 02:06PM Report Comment
 

5. libertas said...

No, I think it is in part due to lack of materials. 48 week lead in times for bricks at present.

They need to re-structure and start importing from China where there is a downturn. Soon as orders come through, building picks up.

They just started work at Liverpool Street on two huge new skyscrapers, 100 Bishopsgate, and there is now activity at the Pinacle. Also, stirrings of all the huge towers at Bishopsgate Goodsyard and the massive set of towers at Shoreditch and places like Blackfriars.

Anecdotally, there are a huge number of sites in London right now with piling equipment, just breaking the ground on huge jobs. It is as if the building boom has only just begin.

Sunday, March 15, 2015 04:57PM Report Comment
 

6. mister ed said...

@5
"They just started work at Liverpool Street on two huge new skyscrapers, 100 Bishopsgate, and there is now activity at the Pinacle. Also, stirrings of all the huge towers at Bishopsgate Goodsyard and the massive set of towers at Shoreditch and places like Blackfriars.

Anecdotally, there are a huge number of sites in London right now with piling equipment, just breaking the ground on huge jobs. It is as if the building boom has only just begin"

Which has absolutely nothing at all to do with housebuilding.

Sunday, March 15, 2015 05:27PM Report Comment
 

7. Shabbycaddy said...

I work for a major house builder, and the material issues isn't as much as an issue this year, infact so much so that I ordered over 100,000 bricks the other day from a major uk manufacturer and got a 10,000 load to site following day, unheard of even in the good days. With us the problem is getting that land through all the hoops on planning and land venders which can take a while

Sunday, March 15, 2015 05:44PM Report Comment
 

8. khards said...

Lots of newbuilds in Somerset, several people I work with taking out overleveraged 95% / shared equity / government loans to buy them. The newbuilds here are cheaper than the decaying stock of 70's bungalows, but I suspect that is because the retirees are outbidding each other over the limited supply.
I guess the builders will keep building whilst the free money / cheap mortgages keep flowing, I suspect TPTB will ensure that this continues.

Sunday, March 15, 2015 08:16PM Report Comment
 

9. libertas said...

Yes, Bungalows are in short supply, almost solely for retirees who bid with hard cash. They are not representative of other markets.

Sunday, March 15, 2015 09:29PM Report Comment
 

10. libertas said...

Mister Ed. All the new skyscrapers at Bishopsgate are residential. There is a 52 storey residential tower going in half way between liverpool Street and Shoreditch and the massive Blackfriar's tower is residential. 100 Bishopsgate and Pinacle are commercial.

Right now, the skyscraper business is primarily being driven by residential, and the process has only just begun. Also towers popping up all over Elephant and Castle with a slow march of tall buildings now spreading along the Old Kent Road. Parts of London once the reserve of offices or wasteland are suddenly coming to life, like a desert having rain after 50yrs of drought.

Sunday, March 15, 2015 09:31PM Report Comment
 

11. enuii said...

Up North local housing association is advertising for tennants on local radio, bungalows are pulled down and 4-5 bed detached houses built on the plots and out of town there has been a flood of conversions and fill-in developments coming onto the market. Another wheese is buying ugly 1950's detached houses, extending to the rear and side and giving the front elevation a new skin of modern brick in the style of new-build properties. The market is awash with high end property developer concoctions to suit all forms of rural snobbery at an inflated price to match especially if you like living 2-3 miles from any form of convenience store. IMHO it is the top of the market that will implode this time taking the developers that specialise in this kind of property with it.

Sunday, March 15, 2015 11:17PM Report Comment
 

12. mister ed said...

@9
Yup, which matters not a jot to 99.99999999999% of the popoulation.

Monday, March 16, 2015 01:18AM Report Comment
 

13. taffee said...

@us Ireland and Spain property markets collapsed after a massive building boom on the basis of huge demand
And chronic lack of supply.

Of course it was just a speculative bubble leaving huge unsold developments in it wake when it burst

Monday, March 16, 2015 04:58AM Report Comment
 

14. khards said...

@taffee - At the time there was huge demand in Ireland and Spain, all from speculators! The question is how do you differentiate real demand from speculative demand?

Monday, March 16, 2015 10:09AM Report Comment
 

15. taffee said...

I said it was a speculative bubble...the speculator % is unknown!...I would suggest
Anyone buying purely on the basis of rising prices who didn't .ed to move could classed
As a speculator....below link worth a read

http://en.m.wikipedia.org/wiki/Irish_property_bubble

Monday, March 16, 2015 12:50PM Report Comment
 

16. libertas said...

No, construction is declining because:
- Shortage of materials
- Community Infrastructure Levy
- Stamp Duty
- Mortgage restrictions in an age of deflation

Monday, March 16, 2015 08:17PM Report Comment
 

17. mister ed said...

@5
"It is as if the building boom has only just begin."

@15
"No, construction is declining..."

I'm glad someone's cleared that up. We're at the beginning of a construction boom while construction is declining...

Monday, March 16, 2015 08:38PM Report Comment
 

18. pete green said...

Libby at 15 - or people are running out of the ability to borrow more - the 'Minsky moment' no matter how low interest rate go or mad government backed schemes. And land prices are too high, fantastically too high for the productivity of our economy as they have absorbed, unproductively, most of the money that has been created..

Monday, March 16, 2015 09:13PM Report Comment
 

19. cornishman said...

"We're at the beginning of a construction boom while construction is declining..."

Perhaps that's what you get with negative interest rates - negative construction booms?

Monday, March 16, 2015 09:24PM Report Comment
 

20. mister ed said...

@18

"Negative construction booms"

Like it.

Monday, March 16, 2015 09:31PM Report Comment
 

21. Bobthebuilder said...

Monthly figures don't mean a lot in building. Because of weather, materials, labour availability, competition from different building sectors and finance, you've got to seasonally adjust and only look at quarters. You must have all seen in the papers that February was a really big month for house building completions and March so far is even better?

Tuesday, March 17, 2015 10:32AM Report Comment
 

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