The Housing Market
13 September 2008
Who are housebuilders trying to fool?
If Britain’s housebuilders really want to sell more homes, they ought to slash their prices rather than lobby the government for packages like last week’s ill-conceived attempt to boost the property market. That’s what the rest of us have done, but while prices of all other houses have plunged, new homes have still been selling for more than they did a year ago.
When the Halifax announced that the fall in house prices had reached double digits in the year to July, the figure that failed to catch the headlines was that new homes had gone up by 1.1 per cent over the previous year. Are we really to believe that new-build is the oasis in the housing market desert — or are the builders playing tricks?
There is indeed sleight of hand by the housebuilders. Though reluctant to cut their prices, they are actively offering other incentives, from waiving the need for mortgage deposits to paying buyers’ legal and survey fees and settling their stamp duty bills — a liability that they largely transferred to the government last week, thanks to their special pleading. Indeed, so successful was their lobbying — even if they criticised the package as insufficient — that the builders who have been giving five-year interest-free loans for a quarter of the purchase price got the government to chip in to that too. So, rather like car manufacturers that offer cashbacks to people buying their vehicles, housebuilders such as Crest Nicholson and Taylor Wimpey have a galaxy of incentives so long as buyers agree a high price.
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Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike A
September 12th, 2008 12:18pm Report this commentThe most sensible article I have seen so far - so why are Brown and Darling not saying the same to the Builders asking for Taxpayers money-cut the prices.
Mike D
September 15th, 2008 9:34am Report this commentIf the recession continues other factors will come into play. Building contracts dry up. Builders break ranks as they chase scarce contracts. The bloated margins of the parties in the production chain are cut. The cost of building reduces in real terms.
Consensus seems to be that the recession will continue. The UK economy is rip off land bar none - it staggers visitors to see the prices charged for anything with a labour or service component, the overindulged workforce and the completely unnecessary jobs. There is plenty of room for price cutting. With low cost Asia and Eastern Europe having a greater influence on the West, it is going to have to be real term price cutting across the economic board. Or sink.
Ten years of debt funded boom has resulted in a generation that has never lived through periods of recession where the market value of new property becomes less than its replacement cost. Probably before the UK reaches this point government will reflate with inflation to follow. Timing is thus likely to be the key issue.
Matt
September 15th, 2008 12:55pm Report this commentMaybe the reason that builders will not lower prices is because a lower price will become the new benchmark for all the other properties in the street. This could cause a cascading bid down of the nearbye properties.
Toolmaker
October 14th, 2008 6:03pm Report this comment1.) Because CEOs and directors of house builders always need more inputs & outputs to get their marginal returns, they only build one half to three quarters of needed housing, they dont want fill all the housing needs and use up all their inputs and they want to increase the rarity value of housing as a commodity! If they really wanted to build enoth houses they have enoth financial influence to get local governments to allocate land!
Therefore in order to save capitalism one or two large house builders will have to be nationalised!
Toolmaker
October 14th, 2008 6:05pm Report this commentI didnt post these comments above called Mike A, im the real Mike A aka Toolmaker
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