Newsnight: Housing shortage the biggest social justice crisis of our times

wotsthat

Graham_Devon wrote: »

Give it up Hamish. Profit margin is self explanatory.

That £78m you were talking about was Taylor Wimpey's pre tax profit on a £1.8bn turnover. That's a profit margin of just over 4%. Nationwide are paying 4.25% tax free to stick capital in their Flexclusive ISA.

An 11% per house margin is a product margin - not the same as a profit margin.

ukcarper

PaulF81 wrote: »

My top tip would be work harde at school instead of smoking behind the bike sheds. Mobility is not the responsibility of the state. We all make our choices in life.

Very simplistic there are plenty of jobs that need to be done that will never be paid well probably the majority.

Graham_Devon

wotsthat wrote: »

That £78m you were talking about was Taylor Wimpey's pre tax profit on a £1.8bn turnover. That's a profit margin of just over 4%. Nationwide are paying 4.25% tax free to stick capital in their Flexclusive ISA.

An 11% per house margin is a product margin - not the same as a profit margin.

Stop purposely confusing matters.

Taylor Whimpey do other things apart from building houses (including complex land buying and selling). We were talking profit per build.

PaulF81

ukcarper wrote: »

Very simplistic there are plenty of jobs that need to be done that will never be paid well probably the majority.

Agreed. Which is why people should work harder at school to float to the top.

ukcarper

Graham_Devon wrote: »

Stop purposely confusing matters.

Taylor Whimpey do other things apart from building houses (including complex land buying and selling). We were talking profit per build.

OK lets say these builders sell their houses at cost and the prices fall 10% do you think that would improve things that much and if they can't make a profit will they carry on building,

ukcarper

PaulF81 wrote: »

Agreed. Which is why people should work harder at school to float to the top.

I agree people should work hard but we can't all float to the top and those who don't have to live somewhere.

Graham_Devon

ukcarper wrote: »

OK lets say these builders sell their houses at cost and the prices fall 10% do you think that would improve things that much and if they can't make a profit will they carry on building,

It's not a case of moving to the extreme. No one has suggested selling at cost.

However, if we take a £187,000 house (If I recall, this was the average of one of the builders selling prices), at 10-14% profit, that leaves up to 26k worth of "play" before they hit cost price.

Now, I don't want this to be made out I;'m suggesting or even wanting them to sell at cost, which it appears to be being twisted into.

I simply disagree that the house builders simply cannot lower prices.

They can. And they would, to save the business had the government not have stepped in. I can't see shareholders being too happy if the companies just said "oh, well we can't make 20k profit per build, therefore, instead of making 8k profit and realigning our business, we'll just shut it down".

Theres plenty of things that could be done, if the NEED was there. Currently, the need for the business is not there. They can build low volumes and sell at high profit levels. Any FTB concerns over affordability have been solved b ythe government, and the amount of FTB's they need, can now pay the price they want, at taxpayer exposure. They ADMIT this themselves.

wotsthat

Graham_Devon wrote: »

Stop purposely confusing matters.

Taylor Whimpey do other things apart from building houses (including complex land buying and selling). We were talking profit per build.

Why what's confusing?

Profit is the stuff that goes in your back pocket after you've paid your taxes, overheads and other expenses.

Your argument seems to be that, if you ignore the costs of business, they're coining it in.

I can't see the complex land buying and selling either. The number of plots are about the same and land sales accounted for only 1% of turnover. What they do have are some hefty finance charges but say they didn't they'd still have a profit margin in single digits.

wotsthat

Graham_Devon wrote: »

However, if we take a £187,000 house (If I recall, this was the average of one of the builders selling prices), at 10-14% profit, that leaves up to 26k worth of "play" before they hit cost price.

The problem is that your starting point is wrong.

Taylor Wimpey in 2011 sold 10,180 houses at an average of £171k. If they made £78m (I think it might actually be less) in profit that's £7.6k per house so straightaway you've overstated profit by 6-10%.

I don't think you've yet grasped the difference between product margin and profit. Take a 4 pint jug of milk; it costs Tesco 84p to buy and they sell it for £1.18 - that's a PRODUCT margin of 34p - it's not a profit - they don't have 34p to 'play' with - if they sell it out for the same price as they bought it then overall it will be loss making to the business.

ash28

PaulF81 wrote: »

Agreed. Which is why people should work harder at school to float to the top.

The trouble the closer to the top you get the narrower it becomes...

There isn't room for many at the top.

Those at the top still need those at the bottom or there would be no top.