More evidence house prices are too high

ukcarper

shortchanged wrote: »

Well I've just had an insurance rebuild cost which is higher than the house price purchase.

Surely it should be the other way around seeing as you also own the plot of land.

Something ain't right there!!!

I suppose it depends on type of house where it is and it will include clearing site.

globalds

shortchanged wrote: »

Well I've just had an insurance rebuild cost which is higher than the house price purchase.

Surely it should be the other way around seeing as you also own the plot of land.

Something ain't right there!!!

If you live in a terrace house then it will surely cost more to rebuild your house if something bad causes it to fall down ?

shortchanged_2

globalds wrote: »

If you live in a terrace house then it will surely cost more to rebuild your house if something bad causes it to fall down ?

Yes I agree, but this is for a detached house.

chewmylegoff

shortchanged wrote: »

Well I've just had an insurance rebuild cost which is higher than the house price purchase.

Surely it should be the other way around seeing as you also own the plot of land.

Something ain't right there!!!

Do you mean that your insurance policy quoted a rebuild cost that is higher than the market value of the house? I thought it was standard practice for policies to over insure for rebuild costs? I don't think it means much. I don't know how it works but presumably if your house burns to the ground the cost of rebuilding it would be higher than building a new house on 'virgin' land as you need to remove the remains first.

Loughton_Monkey

shortchanged wrote: »

Don't you think there is something inherently wrong when the rebuild costs for a house are more than the actual value?

No.

There are cases where 'rebuild' is effectively a demolition job first, then site clearance, and all the building regs/planning applications for what you want to build - especially if designed from scratch.

There were recently some ex-council houses in total rack & ruin sold for £1 as 'market value' because they needed so much doing to them to make them habitable.

Although a pedantic point, you might find one of those houses on top of an eroding cliff. Perhaps one destined not to fall for another 8 years (so maybe they allow you to live there). Were you to want to demolish and rebuild, it would far exceed the [virtually zero] market value.

Of course this isn't the issue here anyway. Persimmon are claiming that the cost of land plus building (not rebuilding) exceeds the market value.

If you go to various house insurance sites (ABI I expect) you can get a fairly good guide to your rebuilding cost. Based on size, area, and type of house. It is very usually surprisingly low given current market value of the house.

The difference is the price of land.

Don't forget that "location" is one of the most important factors. If it's a "nice" area, with some decent established houses, close to "good" schools, and near a station for commuting to the City, then this adds a huge amount to the house value. I suspect that this added value is embedded in the land value.

shortchanged_2

Yes which is why the rebuild costs should be less than the actual value of the house because the actual value includes the plot of land the house is already sitting on. So it highlights the point that house building costs have now become ridiculous for whatever reasons.

ukcarper

shortchanged wrote: »

Yes which is why the rebuild costs should be less than the actual value of the house because the actual value includes the plot of land the house is already sitting on. So it highlights the point that house building costs have now become ridiculous for whatever reasons.

Have you actually received a quote for rebuilding a house or is it just the insurance figure.

CLAPTON

shortchanged wrote: »

Yes which is why the rebuild costs should be less than the actual value of the house because the actual value includes the plot of land the house is already sitting on. So it highlights the point that house building costs have now become ridiculous for whatever reasons.

if there is little demand for houses in a particular area then the price some-one is willing to pay for a new build may well below the price of labour and materials.

why is that surprising?

chucky

shortchanged wrote: »

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.

It says the opposite my old china...

They're saying that they can make larger profit building houses in other areas than north of the Cardiff area. Businesses are driven by profit margin and they have obviously found better locations to build houses with a larger profit margin.

From your little anecdote it means that house prices have a way to go yet.

MFW_ASAP

shortchanged wrote: »

I accept some of what you are saying but ...

I get the feeling that you're not going to accept any argument that goes contrary to your own fixed opinion and VI.