Persimmon has written down the value of its land bank by a further £600 million, on top of the £40 million write down at half year stage.
That's a handsome write down of 17% of the value of 'inventories' as at 30 June 2008, barely four months ago, i.e. their land values are falling at 4% a month, two or three times as fast as house prices generally.
Which stacks up mathematically: if half of the cost of a home at the 2007 peak related purely to the site-only land value, and the value of the bricks and mortar is stable, then you'd expect underlying land values to fall twice as fast as total property values.
Christmas Day: readings for Year C
9 hours ago
6 comments:
Hooray!
Mark,
Can you think of a tax that might prevent land values from forming price bubbles?
I was in several meetings with developers last week and the commercial ones of them are really suffering. But they also keep talking about build cost inflation still rising, yet there was an article the other day that Baggeridge Brick now has a stock inventory of 70m bricks compared with its normal 15m.
On Money Box there wee lots of anecdotes suggesting the trouble was being overplayed - such as callers saying they still had to pay £25 and hour for an electriciian and still only at two weeks' notice but that's about to change significantly I think.
The Thames gateway has more or less ground to a halt. I heard a report the other day of a developer who, having already built the affordable protion of his development was now in the process of actually demolishing the partly built private houses that were to follow (something to do with the tax treatment of a site not actually started and one partly built I believe)! Barratt have been offering 43% discounts to anyone who will take five or more units off their hands and one case in Oxford where a new £300,000 apartment had been sold for £110,000 when someone offered the developer cash to take it off their hands.
> What's not to like?
The way you calculate the land value, but I'll let you off for now.
It appears that AC1 knows you too well, Mark.
PT, sure, AC1 is from the paramilitary wing of the LVT movement. I'm a gradualist and a moderate in all thing.
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