UK construction sector activity sees sharp drop

wotsthat

http://www.bbc.co.uk/news/business-18687365

Activity in the UK construction sector fell at the fastest pace for two and a half years last month, according to a closely watched survey.

More bad news for anyone that thinks building houses might be a step towards resolving the UK'S housing shortgage and preventing future HPI.

Graham_Devon

wotsthat wrote: »

http://www.bbc.co.uk/news/business-18687365



More bad news for anyone that thinks building houses might be a step towards resolving the UK'S housing shortgage and preventing future HPI.

Your never say die attitude to having a pop at those who are trying to buy a house is commendable.

However, this is bad news ALL round. It's not even good news for those who think I'm alright jack, my house will now go up in value as less are being built.

This leads to further unemployment, further recessionary factors etc.

I don't think it's bad news for those suggesting houses need to be built to make homes affordable. Houses weren't being built anyway.

daveyjp

Houses are a small sector. Offices and factories are just as important, but empty rates bills mean spec development has all but stopped. Extend the vacant period to 5 years before an empty rates bill appears and developers might start building properties for businesses which want to expand.

wotsthat

Graham_Devon wrote: »

Your never say die attitude to having a pop at those who are trying to buy a house is commendable.

Crikey someone's got up the wrong side this morning.

Not having a pop at people trying to buy a house - this is bad news for them. I want the % of owner-occupiers to increase not decrease.

shortchanged_2

wotsthat wrote: »

http://www.bbc.co.uk/news/business-18687365



More bad news for anyone that thinks building houses might be a step towards resolving the UK'S housing shortgage and preventing future HPI.

This is exactly the problem wotsthat.

Maybe if the builders built reasonably priced houses then they would sell, then they can go on and build more, creating more jobs and houses etc. Vince Cable realises this.

Obviously though the property bulls on here are delighted by this news even if it does more harm than good to the general economy.

Classic case of the 'I'm alright Jack' mentality.

CLAPTON

shortchanged wrote: »

This is exactly the problem wotsthat.

Maybe if the builders built reasonably priced houses then they would sell, then they can go on and build more, creating more jobs and houses etc. Vince Cable realises this.

Obviously though the property bulls on here are delighted by this news even if it does more harm than good to the general economy.

Classic case of the 'I'm alright Jack' mentality.

if the builders didn't have to subsidise 'affordable houses' and the price of land was cheaper then more people would be able to afford the prices

Graham_Devon

wotsthat wrote: »

Crikey someone's got up the wrong side this morning.

Not having a pop at people trying to buy a house - this is bad news for them. I want the % of owner-occupiers to increase not decrease.

So "more bad news" and "for anyone that thinks" is you stating you want more people able to buy houses?

Pull the other one. Your flip flopping around like a caught fish.

wotsthat

Graham_Devon wrote: »

So "more bad news" and "for anyone that thinks" is you stating you want more people able to buy houses?

No - they are two independent statements i.e.

More bad news for anyone that thinks building houses might be a step towards resolving the UK'S housing shortgage and preventing future HPI.

and

I want the % of owner-occupiers to increase not decrease

Are you just looking for an argument for the sake of it or is there something you're struggling with here?

Graham_Devon

wotsthat wrote: »

No - they are two independent statements i.e.

More bad news for anyone that thinks building houses might be a step towards resolving the UK'S housing shortgage and preventing future HPI.

and

I want the % of owner-occupiers to increase not decrease

Are you just looking for an argument for the sake of it or is there something you're struggling with here?

Right....so one was a pop if they are independant statements.

I give up.

chewmylegoff

CLAPTON wrote: »

if the builders didn't have to subsidise 'affordable houses' and the price of land was cheaper then more people would be able to afford the prices

personally i suspect that the valuation of the land owned by a lot of the big builders is part of the problem.

they have revalued their land upwards during the period up to 2007, making their balance sheets look ace. say you buy some land for £1 million and you can build 20 houses on it at a cost of another £1 million. you can sell those houses for £3 million.

now, say the market price of houses increases by 33% (£4 million) but the price of construction increases by 33% (£1.33 million). great, we'll revalue the land, it is now worth £1.66 million. balance sheet shows assets up by £660k, and you haven't recognised the profit of £1 million you will make when you build and sell the houses yet, happy days.

trouble is that when if the market value of a new build house falls, such that you can now only sell the same 20 houses for £3 million again, if you build the houses you will not be able to recognise a profit in your accounts (and although it would have a +ve cash flow effect, it would have the effect of confirming that all your land was overvalued and you needed to write it all down).

i've got no evidence that this is happening of course, but i bet it is.

CLAPTON

chewmylegoff wrote: »

personally i suspect that the valuation of the land owned by a lot of the big builders is part of the problem.

they have revalued their land upwards during the period up to 2007, making their balance sheets look ace. say you buy some land for £1 million and you can build 20 houses on it at a cost of another £1 million. you can sell those houses for £3 million.

now, say the market price of houses increases by 33% (£4 million) but the price of construction increases by 33% (£1.33 million). great, we'll revalue the land, it is now worth £1.66 million. balance sheet shows assets up by £660k, and you haven't recognised the profit of £1 million you will make when you build and sell the houses yet, happy days.

trouble is that when if the market value of a new build house falls, such that you can now only sell the same 20 houses for £3 million again, if you build the houses you will not be able to recognise a profit in your accounts (and although it would have a +ve cash flow effect, it would have the effect of confirming that all your land was overvalued and you needed to write it all down).

i've got no evidence that this is happening of course, but i bet it is.

yes indeed so; once you start to 'fiddle' a balance sheet it has a way of pincing you on the bum

however, if land became cheaper through easing planning rules there would be smaller buildings willing to start building again

and of course the big boys will need some cash flow too