Is property in a bubble?

buggy_boy

GreatApe wrote: »

Yes there have been small improvements but those have been offset by additional burdens and costs. For instance a modern home needs foundations that are deeper and thicker than most Victorian homes were built with. That adds to labor and material costs.

Likewise a dual brick with insulation wall is going to be more costly and take more labor than a double brick solid wall.

Also bear in mind that the cost of human labor in real terms is a lot higher today than it was fifty years ago. Thus means even if it takes exactly the same number of man days to build a home you are now less productive as each man day costs more.

There must be ways to make things much more productive. Mass production doesn't mean lower quality it can mean much higher quality.

I would not call some of the improvements small, Even if victorian foundations are not as deep, when you compare how they dug the foundations to the machines we have now, how they mixed concrete compared to how we do now. I get what you are saying, there have been no massive change in the way we build houses but there have been lots of small changes that build up to a massive productivity increase, things like plasterboard for example has made a huge difference...

Yes certain things have been made more stringent because of energy efficiency and safety but thats a good thing...

You can get pre-fabricated buildings that can be put up very fast and can be of high quality, unfortunately because of the name and the connotations that brings with regards the post war pre-fab houses and the sort of issues they had with non-standard materials such as concrete it will be very difficult to make any new technique be a success which is why there has not been and is unlikely to be at least in the UK a lot of investment in any new technology.

GreatApe

buggy_boy wrote: »

I would not call some of the improvements small, Even if victorian foundations are not as deep, when you compare how they dug the foundations to the machines we have now, how they mixed concrete compared to how we do now. I get what you are saying, there have been no massive change in the way we build houses but there have been lots of small changes that build up to a massive productivity increase, things like plasterboard for example has made a huge difference...

Yes certain things have been made more stringent because of energy efficiency and safety but thats a good thing...

You can get pre-fabricated buildings that can be put up very fast and can be of high quality, unfortunately because of the name and the connotations that brings with regards the post war pre-fab houses and the sort of issues they had with non-standard materials such as concrete it will be very difficult to make any new technique be a success which is why there has not been and is unlikely to be at least in the UK a lot of investment in any new technology.

But clearly things have not gotten more productive its not really a matter of debate its just a matter of looking at build costs. In the very cheapest parts of the country a new home costs ~£2,000 /sqm so £160,000 for a 80sqm home. That is almost 5 x full time median male income

How expensive was it to build property in say 1950? More than 5 x full time median male income? No so productivity has not improved

For things to be getting more productive you need prices vs wages to be falling that clearly has not happened with property. Compare that to for example food and we are much more productive at producing food today than in 1950. An hour of labor buys you 100 eggs today. Go back to 1950 and you are looking at one hour of labor buying 10-20 eggs in 1950. So the nation is much much better today at producing and retailing eggs some 5-10x better. With house building we are roughly the same and some studies show we are actually less productive now.


What you are doing is making the mistake of looking at just one task like putting nails into wood and concluding that a nail gun means a joiner is much more productive than a joiner with a hammer in 1950. Even then you need to look at the total of the task eg the cost of the compressor to power the nailgun, the cost of the electricity, the cost and time to move a nailgun and the compressor to and from location vs a small hammer, the cost of replacing a more expensive tool the capital cost of the more expensive tool the time to service and maintain the tool. etc etc. There will be a tradeoff if your going to be nailing 20 nails in one location the hammer is probably much more productive. If you are going to be nailing 20,000 nails then maybe the nail gun. Either way this is needless complexity all you need to do is look at the build cost because that includes all the costs you can think of and many of the costs you wont think to include. And by that metric building homes is not notably more productive today than in 1950

GreatApe

buggy_boy wrote: »

I would not call some of the improvements small, Even if victorian foundations are not as deep, when you compare how they dug the foundations to the machines we have now, how they mixed concrete compared to how we do now. I get what you are saying, there have been no massive change in the way we build houses but there have been lots of small changes that build up to a massive productivity increase, things like plasterboard for example has made a huge difference.

have a watch of this, house building 90 years ago

https://www.youtube.com/watch?v=5bH-cDGyW7k

buggy_boy

GreatApe wrote: »

have a watch of this, house building 90 years ago

https://www.youtube.com/watch?v=5bH-cDGyW7k

This proves me entire point....

- Firstly a slow lumbering machine puts dirt into a small van.. The Van and machine would have been prone to lots of break downs. Now we have reliable much more powerful diggers that rip out the dirt and put it in massive lorries, much more productive.

- Then they show loads of bags of either cement or sand and them obviously mixing it onsite and pushing it up ramps on wheel barrows, now you would get it pre-mixed in cement mixers and pumped through a pipe straight into the location needed, way more productive.

- Treatment to stop termites, all our wood exposed to outside is treated so no need for this step, huge saving.

- The guy hand tightens the bolt and will likely later use a hand tool to tighten, where as now it would be a power tool, way more productive

- Obviously power tools starting to come in as he cuts the joists however because timber is now stronger (because of the curing techniques) there is not a need to have the joists at an angle like that any more which is a massive saving, the power tool used is not as mobile as needs a power cord, this will also need a generator etc, now we have more powerful battery tools. Notice the guy hitting in the nails with a hammer, a lot less productive than a nail gun we use today.

- Again with the stud work where as not it would take seconds to put up and take less people because of the nail gun, in the video people are hammering away, you can visibly see how much longer this would take.

- They then move on to the fireplaces, they were time consuming parts of the build, now not needed.

- Just look at the roof, now because of membranes and shaped roof tiles it takes a fraction of the time and fraction of the materials, look how close they have having to put those shingles to each other to get it water tight so each is 3 layers thick and hammering in the nails by hand... Today is a huge productivity boost because of the new technologies.

- Molten lead for that looks like either drains or gutter connections, dont forget theses were metal, they are big and heavy needing lots of man power, then there is the time and effort of melting the lead, compare that to now with plastic pipes, rubber push fit seals and silicone it takes seconds where as it would have taken hours and uses less man power, a massive productivity boost.

- Onto the electrician, do you see him stripping the wire with a knife, look now for automatic wire strippers, they are so quick and so easy to use and a massive productivity increase, not to meantion it looks as though he is using conduit, that is a pain and a massive labour and material cost because the wiring would have been pre PVC, now with the pvc wiring you just use clips to hammer it to the joists, a huge productivity increase.

- Plastering, look at all that wood to plaster, now with plasterboard you just need a thin skim of plaster and have you ever seen a plasterer use a power drill with mixer on the end to mix the material? The plaster itself is a lot better these days, it can be done in a more varied temperature range, and less likely to cracking meaning its more likely to be a good job first time every time, again productivity increase

- Chicken wire and stucco, did you watch this video? clearly its from the US, if you looked at the same from the UK you would see we were even further behind the times but if you look at America now when they use stucco they use machines to blast it on instead of by hand, a huge productivity boost.

- The windows, look at all the adjustments he is having to make, the time it would have taken to build that wooden window by hand, shave and sand the wood, then there is the painting... Have you ever seen a UPVC window being build by a machine, it gets build in minutes rather than days. How is that not a massive productivity boost, plus you need less skilled labour, just like a lot of the above.

- Look at that bath, how heavy that is, how long that took to make, now with our lighter weight bath its much easier and quicker to make and handle around the job site so time is not wasted having to move it around.

- Tiling, look at how small the tiles are, we struggled to make bigger tiles as they would break, have you seen the small tiles you get on sheets and the large stone tiles you get.. You have obviously never tiled a bathroom, but the pre mixed adhesive to the grout to the tiles is all so much easier to work with and saves a huge amount of time, there are two blokes then and it would take them longer then than one bloke now. How is that not a productivity increase?

- Again with the hammer on wood flooring, we now have laminate that slots together, or vinyl (They prob still had carpet then) which are much cheaper, quicker to install and less maintenance.

- Painting, with the roller saves time, also the doors these days come pre primed to save time or on a job site they often use a spray gun which is quicker and better finish.


I hear where you are coming from but its like saying there has been no advancement in productivity of cars and they are more expensive now... But its just not true, cars like homes have seen massive improvements over the years.

The point is if you look at productivity, if you built a 1940's/50's house using the same techniques as then and built an identical house using modern tools and techniques and materials it would much cheaper and faster to build using the modern tools and materials, thats productivity, you cant compare like a modern Iphone to a mobile 20 years ago and say we havent increased productivity as we could build mobile phones cheaper and faster back then, its not comparing like for like..

oz0707

GreatApe wrote: »

Yes there have been small improvements but those have been offset by additional burdens and costs. For instance a modern home needs foundations that are deeper and thicker than most Victorian homes were built with. That adds to labor and material costs.

Likewise a dual brick with insulation wall is going to be more costly and take more labor than a double brick solid wall.

Also bear in mind that the cost of human labor in real terms is a lot higher today than it was fifty years ago. Thus means even if it takes exactly the same number of man days to build a home you are now less productive as each man day costs more.

There must be ways to make things much more productive. Mass production doesn't mean lower quality it can mean much higher quality.

Agree that labour is a lot more expensive. This is turn probably drives innovation. I don't think people realise how streamlined the housebuilding process is now. As mentioned above, push fit connections for instance. Large format blockwork for unseen walls (internally or rendered). I'd argue cavity walls quicker than solid brick with arch formed headers etc. If you look at the man hours to build a modern house it will be drastically lower nowadays. Materials are relatively cheap now which is why we deskill and over engineer i.e. foundations - mark and dig out in 1 day, pour concrete in another. Maybe 48 man hours total divided by 3 chaps. Olden days perhaps 1 week to excavate and 1 week to construct?

oz0707

GreatApe wrote: »

But clearly things have not gotten more productive its not really a matter of debate its just a matter of looking at build costs. In the very cheapest parts of the country a new home costs ~£2,000 /sqm so £160,000 for a 80sqm home. That is almost 5 x full time median male income

How expensive was it to build property in say 1950? More than 5 x full time median male income? No so productivity has not improved

For things to be getting more productive you need prices vs wages to be falling that clearly has not happened with property. Compare that to for example food and we are much more productive at producing food today than in 1950. An hour of labor buys you 100 eggs today. Go back to 1950 and you are looking at one hour of labor buying 10-20 eggs in 1950. So the nation is much much better today at producing and retailing eggs some 5-10x better. With house building we are roughly the same and some studies show we are actually less productive now.


What you are doing is making the mistake of looking at just one task like putting nails into wood and concluding that a nail gun means a joiner is much more productive than a joiner with a hammer in 1950. Even then you need to look at the total of the task eg the cost of the compressor to power the nailgun, the cost of the electricity, the cost and time to move a nailgun and the compressor to and from location vs a small hammer, the cost of replacing a more expensive tool the capital cost of the more expensive tool the time to service and maintain the tool. etc etc. There will be a tradeoff if your going to be nailing 20 nails in one location the hammer is probably much more productive. If you are going to be nailing 20,000 nails then maybe the nail gun. Either way this is needless complexity all you need to do is look at the build cost because that includes all the costs you can think of and many of the costs you wont think to include. And by that metric building homes is not notably more productive today than in 1950

Interesting perspective here. I think the 2 parts need separating i.e building and land.

If we say that average 80sq. property is built for 1000/m2. Rough and ready but its a workable average in midlands.
80k to build

Probably more like 200k to buy here in Midlands. 1500/m2 for land and profit.

Going back to productivity, a good tradesperson building above house maybe earning 1000 a week now. So house costs a weeks wages for each m2. Not sure how that equates to olden days.

Land and developers profit week and a half wages per m2 of house. Presuming the property is on average plot and not 3 acres. Again, not sure how this compares to previous times but sure it was a lot lower as the income multiples were less.

I think its all based on debt and what institutions are willing to lend compared to earnings. If earning or income multiples move up then so do prices. As we have seen since women entered the workforce. That and the system we have here where most new builds built by developers. Compare to Aus where a lot of housing is built for the end user. Not sure how USA compares?

GreatApe

oz0707 wrote: »

Agree that labour is a lot more expensive. This is turn probably drives innovation. I don't think people realise how streamlined the housebuilding process is now. As mentioned above, push fit connections for instance. Large format blockwork for unseen walls (internally or rendered). I'd argue cavity walls quicker than solid brick with arch formed headers etc. If you look at the man hours to build a modern house it will be drastically lower nowadays. Materials are relatively cheap now which is why we deskill and over engineer i.e. foundations - mark and dig out in 1 day, pour concrete in another. Maybe 48 man hours total divided by 3 chaps. Olden days perhaps 1 week to excavate and 1 week to construct?

48 hours is likely a big underestimated.
How much does it cost to get to the stage of putting in place the foundations?
If its £7,500 that is closer to 500 hours work @ £15 an hour.

buggy_boy wrote: »

This proves me entire point....

- Firstly a slow lumbering machine puts dirt into a small van.. The Van and machine would have been prone to lots of break downs. Now we have reliable much more powerful diggers that rip out the dirt and put it in massive lorries, much more productive.

- Then they show loads of bags of either cement or sand and them obviously mixing it onsite and pushing it up ramps on wheel barrows, now you would get it pre-mixed in cement mixers and pumped through a pipe straight into the location needed, way more productive.

- Treatment to stop termites, all our wood exposed to outside is treated so no need for this step, huge saving.

- The guy hand tightens the bolt and will likely later use a hand tool to tighten, where as now it would be a power tool, way more productive

- Obviously power tools starting to come in as he cuts the joists however because timber is now stronger (because of the curing techniques) there is not a need to have the joists at an angle like that any more which is a massive saving, the power tool used is not as mobile as needs a power cord, this will also need a generator etc, now we have more powerful battery tools. Notice the guy hitting in the nails with a hammer, a lot less productive than a nail gun we use today.

- Again with the stud work where as not it would take seconds to put up and take less people because of the nail gun, in the video people are hammering away, you can visibly see how much longer this would take.

- They then move on to the fireplaces, they were time consuming parts of the build, now not needed.

- Just look at the roof, now because of membranes and shaped roof tiles it takes a fraction of the time and fraction of the materials, look how close they have having to put those shingles to each other to get it water tight so each is 3 layers thick and hammering in the nails by hand... Today is a huge productivity boost because of the new technologies.

- Molten lead for that looks like either drains or gutter connections, dont forget theses were metal, they are big and heavy needing lots of man power, then there is the time and effort of melting the lead, compare that to now with plastic pipes, rubber push fit seals and silicone it takes seconds where as it would have taken hours and uses less man power, a massive productivity boost.

- Onto the electrician, do you see him stripping the wire with a knife, look now for automatic wire strippers, they are so quick and so easy to use and a massive productivity increase, not to meantion it looks as though he is using conduit, that is a pain and a massive labour and material cost because the wiring would have been pre PVC, now with the pvc wiring you just use clips to hammer it to the joists, a huge productivity increase.

- Plastering, look at all that wood to plaster, now with plasterboard you just need a thin skim of plaster and have you ever seen a plasterer use a power drill with mixer on the end to mix the material? The plaster itself is a lot better these days, it can be done in a more varied temperature range, and less likely to cracking meaning its more likely to be a good job first time every time, again productivity increase

- Chicken wire and stucco, did you watch this video? clearly its from the US, if you looked at the same from the UK you would see we were even further behind the times but if you look at America now when they use stucco they use machines to blast it on instead of by hand, a huge productivity boost.

- The windows, look at all the adjustments he is having to make, the time it would have taken to build that wooden window by hand, shave and sand the wood, then there is the painting... Have you ever seen a UPVC window being build by a machine, it gets build in minutes rather than days. How is that not a massive productivity boost, plus you need less skilled labour, just like a lot of the above.

- Look at that bath, how heavy that is, how long that took to make, now with our lighter weight bath its much easier and quicker to make and handle around the job site so time is not wasted having to move it around.

- Tiling, look at how small the tiles are, we struggled to make bigger tiles as they would break, have you seen the small tiles you get on sheets and the large stone tiles you get.. You have obviously never tiled a bathroom, but the pre mixed adhesive to the grout to the tiles is all so much easier to work with and saves a huge amount of time, there are two blokes then and it would take them longer then than one bloke now. How is that not a productivity increase?

- Again with the hammer on wood flooring, we now have laminate that slots together, or vinyl (They prob still had carpet then) which are much cheaper, quicker to install and less maintenance.

- Painting, with the roller saves time, also the doors these days come pre primed to save time or on a job site they often use a spray gun which is quicker and better finish.


I hear where you are coming from but its like saying there has been no advancement in productivity of cars and they are more expensive now... But its just not true, cars like homes have seen massive improvements over the years.

The point is if you look at productivity, if you built a 1940's/50's house using the same techniques as then and built an identical house using modern tools and techniques and materials it would much cheaper and faster to build using the modern tools and materials, thats productivity, you cant compare like a modern Iphone to a mobile 20 years ago and say we havent increased productivity as we could build mobile phones cheaper and faster back then, its not comparing like for like..

Once again I understand specific tasks in isolation can be seen as more rapid. A nail gun is clearly faster than a hammer but That does not take into account the whole picture.

A nail gun costs much more than a hammer and requires more maintenance and needs to be replaced every so often it doesn't last forever. All these costs are effectively time. You can think of £15 as one human hour. So if a nail gun costs £150 and lasts two years and costs £150 in maintiance you are effectively paying 10 hours of time per year to own the nail gun. How many nails can an experienced joiner nail in 10 hours? 6000 nails? So that is your break even point if a joiner nails less than 6000 nails in a year the hammer is actually more productive. In fact that's probably a low estimate becuade it takes more time and effort to move the heavy nail gun olig it in ubolig it go to the store to buy spare sorts or a replacement etc etc. So maybe the break even point is closer to 10,000 nails per year. Less than that and the hammer is actually more productive

As I keep saying you don't need to go into detail like this. You can get a good estimate of the time cost of something by simply looking at its price. A new build home that costs £150,000 is effectively 10,000 hours of Human labor. That does not mean 10,000 hours is spent building the house but building everything. Eg the people who make the bricks the people who deliver the bricks the people who work in HR for the building company the insurance company workers that provide the insurance etc etc.

The way you can figure out if house building is more productive is to look at the total cost in human hours today vs say 50 or even 100 years ago. Today it costs roughly 10,000 human hours to make a house and fifty years ago I am suggesting it was also roughly 10,000 human hours.

Another factor is taxes. 100 years ago taxes were much lower.
Today when you pay a company to build you a house you are also effectively paying for the NHS and pensions etc.

oz0707

Agreed that costs to get to that point may be more but I'm specifically talking about the foundations. I.e. Trenches and concrete.

BikingBud

GreatApe wrote: »

A new build home that costs £150,000 is effectively 10,000 hours of Human labor. That does not mean 10,000 hours is spent building the house but building everything. Eg the people who make the bricks the people who deliver the bricks the people who work in HR for the building company the insurance company workers that provide the insurance etc etc.

Are you talking about cost or sale price?

What about profit margins?

10000 hours is 250 man weeks @40hrs/week, perm that and add resource as you like but what house are you building that takes so long?

GreatApe

oz0707 wrote: »

Interesting perspective here. I think the 2 parts need separating i.e building and land.

If we say that average 80sq. property is built for 1000/m2. Rough and ready but its a workable average in midlands.
80k to build

Probably more like 200k to buy here in Midlands. 1500/m2 for land and profit.

Going back to productivity, a good tradesperson building above house maybe earning 1000 a week now. So house costs a weeks wages for each m2. Not sure how that equates to olden days.

Land and developers profit week and a half wages per m2 of house. Presuming the property is on average plot and not 3 acres. Again, not sure how this compares to previous times but sure it was a lot lower as the income multiples were less.

I think its all based on debt and what institutions are willing to lend compared to earnings. If earning or income multiples move up then so do prices. As we have seen since women entered the workforce. That and the system we have here where most new builds built by developers. Compare to Aus where a lot of housing is built for the end user. Not sure how USA compares?

I think you are underestimating actual build costs.

If we look at very cheap areas of the country eg say Telford in the Midlands the sale price is about £2000/sqm. Building land there is as low as you can realistically get. Sure the builders might have 20% margin but they are not charities you don't work for free I don't work for free so we shouldn't expect building companies to work for free.

If you take £2000/sqm as the average build cost that makes £160,000 for a 80sqm home. Well in a lot of the country you can buy homes for less than £160,000 whch means house prices haven't risen more than build costs in most the country.

Also I've known lots of people to have had full refurbs done on their Hines and its often cost nkre than £1000/sqm which again is evidence that build costs are higher then £1000/sqm

Also there is a lot more labor going into a house than just the persons on site joining materials together. Everything from the architect to the town planner to the deliver drivers to the banker who organised the £100 million to fund the site.

Roughly speaking in the UK its £15/hr so if a house costs £150,000 there is 10,000 hours enbeded in that house. At the same token if a pizza costs £15 its roughly 1 hour of Hunan labor embedded in that pizza. If a haircut costs £15 its one hour human labor even of it takes the man 30 minutes to cut your hair its 1 hour Hunan labor becuade there is a fraction of time for thebclippers for the electricity for the chair for everything in the supply of giving you that haircut.

Anyway back to the main point. House building hasn't gotten more productive over the decades. Some individual tasks have but not the whole task of building homes.