More evidence house prices are too high

shortchanged_2

http://www.bbc.co.uk/news/uk-wales-24288018

So one of the biggest house building companies in Wales is saying it will no longer build houses north of the Cardiff area.

Persimmons say that they can't make enough profit on a small 3 bed house that is marketed for £120,000. This in areas that have a relatively low average house price.

So surely this asks the question........why does it cost so much to build houses these days compared to 13 odd years ago when the same new build house in the same area would have probably gone on the market for about £60,000?

Yes of course there is the energy efficiency regulations etc but do they really equate to this difference in cost? I don't believe so. So can anyone put me straight?

Bearing in mind we are talking about less desirable areas here so I would imagine land costs are not extortionate.

AndyGuil

Materials, labour, regulatory costs (inc. legal) and land purchase. Materials costs have gone up a far bit over the years. Labour probably has too. If not these then a combination or perhaps something else?

shortchanged_2

AndyGuil wrote: »

Materials, labour, regulatory costs (inc. legal) and land purchase. Materials costs have gone up a far bit over the years. Labour probably has too. If not these then a combination or perhaps something else?

I accept some of what you are saying but surely the things you have stated don't really account for such as large rise in a relatively short period of time.

What I really want to know is how only 13 odd years ago builders were able to build and sell the same type of house for half the price and still make a profit?

System

Doesn't this prove the opposite?

AndyGuil

shortchanged wrote: »

I accept some of what you are saying but surely the things you have stated don't really account for such as large rise in a relatively short period of time.

What I really want to know is how only 13 odd years ago builders were able to build and sell the same type of house for half the price and still make a profit?

If they are building elsewhere then their demand increases which increases their labour cost. That plus materials is the majority of the increase I expect.

Thrugelmir

shortchanged wrote: »

What I really want to know is how only 13 odd years ago builders were able to build and sell the same type of house for half the price and still make a profit?

With the recent property boom has come a boom in land prices. Everybody now wants to cash in. As long as house prices remain high so will land.

Watch Grand Designs or build a house for a £100k and see what people are prepared to pay for a plot.

Loughton_Monkey

shortchanged wrote: »

.....So surely this asks the question........why does it cost so much to build houses these days compared to 13 odd years ago when the same new build house in the same area would have probably gone on the market for about £60,000?

Why make your title "More evidence house prices are too high" when it should have said "More evidence house prices have some way to go up yet."

We all know that prices are dictated by supply & demand. Currently demand is well above supply. But if/when the supply goes up and/or demand comes down, there is still a limiting factor: The cost of land + building + other sales costs.

New regulations. Ever increasing Health & Safety baggage. Disappearance of "lump labour". Blackmail from local councils for other contributions to infrastructure. Increasing NIMBYism and cost of planning enquiries. Higher profit expectations from large builders. Higher management salaries/bonus.

Add that to a cheap area like these parts of Wales, where there is not much money in sheep these days, I'm not surprised at this.

Just an additional thought. Maybe these areas are considered ripe for fracking, so they don't want too many smelly residents around to protest.

globalds

Have car prices doubled in the last 13 years ?

Only saying this as surely labour and materials for car manufacture have increased on a par with construction materials and labour ?

I don't think car prices are double ..
And construction sites have embraced labour saving almost as much as motor vehicle construction has .

So it does seem odd .

shortchanged_2

Thrugelmir wrote: »

With the recent property boom has come a boom in land prices. Everybody now wants to cash in. As long as house prices remain high so will land.

Watch Grand Designs or build a house for a £100k and see what people are prepared to pay for a plot.

Yes fair enough Thrug. But we are talking about areas here that don't have particularly high plot prices.

I'm just not sure why build costs have gone so ridiculous over the past decade or so.

Something looks very fishy here to me.

ukcarper

You must find it even more odd that a house that was built for £60k 13 years ago is now selling for £120k

chewmylegoff

globalds wrote: »

Have car prices doubled in the last 13 years ?

Only saying this as surely labour and materials for car manufacture have increased on a par with construction materials and labour ?

I don't think car prices are double ..
And construction sites have embraced labour saving almost as much as motor vehicle construction has .

So it does seem odd .

Probably something to do with the fact the main cost of a car isn't the cost of the land where it is built.