Developers Pushing Help to Buy Big Time

ukcarper

ILW wrote: »

Why does a developer need to sell a house at 3 times the 2000 price to make enough profit to make it viable?

Cost have not risen by that much, in fact labour costs have fallen signifcantly.

Are prices 3x what they were in 2000 and surely it depends when they bought the land.

CLAPTON

ILW wrote: »

Why does a developer need to sell a house at 3 times the 2000 price to make enough profit to make it viable?

Cost have not risen by that much, in fact labour costs have fallen signifcantly.

The question is really why don't more people start building companies as profit are guaranteed and huge.

As many (most) brickies, sparkies, plumbers, roofers etc are self employed anyone with some management skills and a bit on enterprise can do it.

So here is a amzing opportunity to make huge sums of money and provided a social service.

Thrugelmir

thescouselander wrote: »

The same effect could be achieved for nothing by putting a time limit on planning permission issued on landbanks. Round by us developers only release a few plots at a time to inflate prices - this practice needs to be dealt with.

This is to do running any business. You only make\build what you can sell. Housebuilding being an example of an industry which is both capital and labour intensive.

thescouselander

HAMISH_MCTAVISH wrote: »

We need to build around 3 times as many houses as we do.

The main reason we aren't building them is because of the dysfunctional lending system, and mortgage rationing.

The only way to get anything like enough houses built is to massively increase lending.

This is but a small step in the right direction, but at least it's working better than previous attempts.

Or we could just make land prices cheaper by making more of it available with the appropriate planning permission.

HAMISH_MCTAVISH

thescouselander wrote: »

Or we could just make land prices cheaper by making more of it available with the appropriate planning permission.

There is currently a 3 year supply of plots with planning permission.

The problem at the moment is a shortage of mortgages.

That's why more houses aren't getting built.

This scheme is helping to alleviate that shortage. Which is resulting in some more houses being built, although still nowhere near enough

I totally agree that restricted supply of land with planning is one of the biggest contributing factors as to why there has historically been a shortage of homes in Britain.

But making more land available today still won't increase the number of houses being built at the moment, as it's not currently that which is causing the problem. It'll help for the future though, so should still be done.

thescouselander

Hamish. I don't know where you get these ideas from. There are loads of mortgages available and the banks are falling over themselves to lend - just not at the exorbitant LTV ratios required to buy a new build house. The problem is not on the demand side of the equation. The problem is that supply cannot be provided at a cost supportable to the demander. There's no point in increasing debt in a period of historically unprecedented low interest rates. Sooner or later rates will go up and chickens will come home to roost - we need to deal with the fundamental problem (that houses are too expensive) rather than solving the issue short term through temporary additional lending.

CLAPTON

supply and demand determine the price unless government or cartels are colluding to artificial manage either or both.

Thrugelmir

thescouselander wrote: »

the banks are falling over themselves to lend

Really? Where's the evidence.

HAMISH_MCTAVISH

thescouselander wrote: »

Hamish. I don't know where you get these ideas from. There are loads of mortgages available and the banks are falling over themselves to lend - .

Mortgage rationing is absolutely the biggest problem facing the housing market today, and it's not just my opinion.

Here's the BBC, RICS and even the CML admitting it....

A survey of chartered surveyors said that potential buyers were still being put off by economic worries and continued mortgage rationing.
http://www.bbc.co.uk/news/business-13760176

Mortgage rationing, which has depressed UK property sales, will stay in force until at least the end of 2012, the CML says.
http://www.bbc.co.uk/news/business-13620099

the rationing of mortgage funds by lenders are attributed to the general stagnation of the market.
http://www.mortgageintroducer.com/mortgages/240338/5/Industry_in_depth/House_prices_still_sliding.htm

One factor weighing on the market has been the continued rationing of mortgage funds by lenders
http://www.vanguardngr.com%2F2011%2F05%2Fuk-housing-market-still-lacklustre%2F

And finally, from the CML themselves, who readily accept that the UK mortgage market is "dysfunctional".....

In our view, the key point about UK mortgage and housing markets is that they remain dysfunctional, and are not effectively meeting the needs of consumers.

What is really needed is a sufficient flow of mortgage lending to allow those who can fulfil their financial commitments to move home in response to their changing circumstances if they want to, and for first-time buyers to realise their reasonable aspirations to become home-owners.

grizzly1911

HAMISH_MCTAVISH wrote: »

We need to build around 3 times as many houses as we do.

The main reason we aren't building them is because of the dysfunctional lending system, and mortgage rationing.

The only way to get anything like enough houses built is to massively increase lending.

This is but a small step in the right direction, but at least it's working better than previous attempts.

Have houses ever been built at the rate you suggest is needed since council house building ceased. Have developers ever filled the gap?

Even at the hedonistic heights of reckless mortgage lending to anyone who had a pulse?

Even if they did somehow ratchet up supply there are not sufficient people with the ability to sustainably afford the long term mortgage commitment to actually purchase them.

Sure with massive treasury support, as per US fannie wotsits, perhaps loads more could be be built and sold and then await the raft of defaults.

If the treasury is going to have to underwrite them it may as well build them and let them out as a government BTL.