House Prices "Heavily Undervalued" says Times article

chucknorris

shortchanged wrote: »

So thousands of pieces of undeveloped land WITH planning permission granted and builders just sitting on them.

What's that about then?

There are a number of reasons why developers may not immediately build on their land:

a) They need to plan their developments over a number of years and ensure
continuity, they don't simply buy and build, they need to plan over a number of years.
b) The land itself can be a good investment.
c) They might have bought at a time when land values were higher and it is more profitable (or to avoid a loss) to sit it out a while before developing.
d) They might be negotiating with planners for a higher plot density.
e) They might be hoping to buy adjacent sites to build a much larger development.
f) Other reasons? I'm no expert I've probably missed a few reasons.

shortchanged_2

chucknorris wrote: »

There are a number of reasons why developers may not immediately build on their land:

a) They need to plan their developments over a number of years and ensure
continuity, they don't simply buy and build, they need to plan over a number of years.
b) The land itself can be a good investment.
c) They might have bought at a time when land values were higher and it is more profitable (or to avoid a loss) to sit it out a while before developing.
d) They might be negotiating with planners for a higher plot density.
e) They might be hoping to buy adjacent sites to build a much larger development.
f) Other reasons? I'm no expert I've probably missed a few reasons.

g) or just sitting on them to help push prices up by stifling supply.

OffGridLiving

shortchanged wrote: »

So thousands of pieces of undeveloped land WITH planning permission granted and builders just sitting on them.

What's that about then?

If the builders could build on this land and make a tidy profit as you seem to be saying, then why are they not doing?

If the builders bought the land on credit then they are paying interest on the loan, if they used cash then that money is not in the bank earning interest. Having the land sat there costs them money, so it makes no sense not to build there.....

...unless there is some reason for them not to. In your opinion, what is this reason?

chucknorris

shortchanged wrote: »

g) or just sitting on them to help push prices up by stifling supply.

Generally speaking I don't tend to subscribe to conspiracy theories, more often than not those who do tend to be trying to blame others for their own lack of success, the answer is usually much closer to home.

But obviously they will be an element of truth in that you wouldn't want to over supply to the point where it was detrimental to profits, that would be just be stupid and greedy.

shortchanged_2

OffGridLiving wrote: »

...unless there is some reason for them not to. In your opinion, what is this reason?

See post 53.

shortchanged_2

chucknorris wrote: »

Generally speaking I don't tend to subscribe to conspiracy theories, more often than not those who do tend to be trying to blame others for their own lack of success, the answer is usually much closer to home.

Which of course goes both ways. As the current agenda suits your needs and benefits of increasing house prices you see nothing wrong with what is going on.

CLAPTON

shortchanged wrote: »

g) or just sitting on them to help push prices up by stifling supply.

stifling supply is only possible where there is a cartel in operation or where the government limits supply and/or demand in some way.

there are thousands of builders both large and small

are you saying that all those builders are colluding together to buy up land and not build?

if there was good money to be made building then those small firms would build to realise the profit.

Anyone can start a building firm.

chucknorris

shortchanged wrote: »

Which of course goes both ways. As the current agenda suits your needs and benefits of increasing house prices you see nothing wrong with what is going on.

Of course there is nothing wrong, they bought the land, it is up to them what they do with it. Whilst it might suit me but I'm pretty certain they don't take my wants into consideration when making decisions and that is what we were discussing 'why they sit on land' rather than who it suits. If it didn't suit me it wouldn't change the logic of the situation.

chucky

shortchanged wrote: »

So thousands of pieces of undeveloped land WITH planning permission granted and builders just sitting on them.

What's that about then?

Because they probably won't be able to make enough profit or margin on the housing market if they built houses there amongst many other business decisions..

OffGridLiving

shortchanged wrote: »

See post 53.

Sorry, we posted at the same time and so I missed your response.

It's a valid point, but undermined by your refusal to show how much of a profit builders could make by building on the plots of land now, rather than waiting.

If you could show that a builder could make a decent margin on the sale of the new builds, then people who are arguing against your point in post 53 would be snookered.

If the builders could build the houses, market them and sell them and make a tidy profit, then there would be no logical argument for holding onto land except to push up prices.

I await your costings with eager anticipation.