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Debate House Prices
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Bovis profits surge 150%
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Quite easily? You should have worked for Taylor Wimpey - they lost money for 4 or 5 years from 2008.
Next time I see my boss I'm going to claim this idea as my own - 'we've been doing it wrong trying to sell as much as possible - let's sell less and put up prices'.
Haha.
There are some massive and highly profitable organisations that make fortunes from speculating on assets prices purely based on buying and selling at the right time. They never even use the product.
Land banking and speculation can make (or lose) billions.
Whether you think that something as essential as housing should be treated in this was is a matter fro another discussion.0 -
Graham_Devon wrote: »Theres really no need to be silly about this.
No one is suggesting that they make huge profits by "stopping building". You are making up a scenario solely so that you can argue against it.
In any market, with a neccesity such as a house, you can quite easily alter the value of the product by reducing or increasing supply.
For builders, increasing supply will not only reduce the price of the property but cost them more due to increased outlay (wages etc).
Hence why to keep costs down, and prices up, builders build at certain levels. Below demand, but enough to keep them at nice profit levels.
The same is done with gas and petrol. We've seen it in action. Huge taps can been turned one way or another dependant on the price required at the time. Often, like houses, that price is often has a political slant.
It's only easy to manipulate the price if there is a monopoly (or cartel) that effectively control supply.
Food, clothing, transport are necessities but it is hard to manipulate the price because on the whole there are plenty of suppliers.
During the period 2008 -12 there was a severe shortage of demand and many builders went bankrupt and even the major companies were in financial distress.
Some people allege that once demand picks up then builders deliberately slow their building rate to maximise price per unit.
I see no evidence of this that there are sites where building is deliberately slowed down where there is proven demand.
Obviously there is a lag in actually building, partly because the need to recruit and to get supplies but also to ensure there is proven sales potential.
If there were very high profits to be made due the majors colluding together to keep supply short, then there would be plenty of opportunity for the smaller boys to start building and making high profits.
Obviously government policy is restricting the supply of land will keep prices high in these circumstances.0 -
How do the smaller boys get a look in if the majors have already banked much of the available land for their own use as and when it suits them? Sitting on land is actually very cheap in this country. I believe some other countries use land taxes to promote a culture of use it or lose it.
If there were very high profits to be made due the majors colluding together to keep supply short, then there would be plenty of opportunity for the smaller boys to start building and making high profits.
Obviously government policy is restricting the supply of land will keep prices high in these circumstances.0 -
If there were very high profits to be made due the majors colluding together to keep supply short, then there would be plenty of opportunity for the smaller boys to start building and making high profits.
The smaller builders are at a disadvantage straight away in todays climate. HTB and such policies only apply to the major builders.
Thats without getting into land banking.
As I said, a parlimentary committee is looking into these issues. Ideas have been bought forward to reclaim land, revoke planning permission, or impose a land tax on these big builders.
You can deny it as much as you like, but I'd consider it a problem simply because such ideas are being put forward. I don't expect those ideas to turn into much as I'm not that naive, parlimentary committees don't hold the same power as the big builders do sat round the table with the PM designing HTB. But it's a problem nevertheless.
You are asking for evidence when you know no evidence can be given. The evidence you are asking for could only be given by the builders themselves.
Have a look at some building sites around you though, and ask youself why the first residents are sitting on a building site for several months, if not years. Sites used to be built and THEN sold. Now we just have to witness building sites for months with a constant "all reserved ...... but our sales office is this way if you are quick" signs plastered all over the owners fencing.
Funny old thing isn't it, that all the plots are sold, but you can still walk into the sales office and be greeted with pamphlets galore, a tour etc by the person sitting in the supposedly redundant sales office giving you material and tours for houses they "don't have". Theres always that "one off plan" that "may just (read, will)" fall through if you act quick, but there are several others ready to move on it...ready.... but not actually having moved on it....they are just sat "poised".
The whole thing is a game from start to finish. One which is pretty damn obvious if you visit many of the half finished building sites.0 -
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How do the smaller boys get a look in if the majors have already banked much of the available land for their own use as and when it suits them? Sitting on land is actually very cheap in this country. I believe some other countries use land taxes to promote a culture of use it or lose it.
If land is cheap why don't the small boys buy some and make huge profits at the expense of the big boys.0
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