Missing Figures Round

From Bloomberg:

U.K. homebuilders reacted to the financial crisis by switching from apartments to single-family homes. After a year, the shift is paying off in rising profit margins, helping companies overcome a weakening property market. The move away from apartments, combined with a 60 percent drop in land prices, may lift operating profit margins in the industry to about 15 percent in three to four years.

1. The article seems to focus on Barratts, who have just put out a trading update for the year to 30 June 2010, which says that their average selling price ('ASP') for private units has increased from £166,500 to £185,000 over the last year (see section headed 'Revenue') and the average price they pay for a building plot is about £40,000 (see Note 7).

2. It appears to be the case that the cost/value of a building plot has fallen by 60% (from £100,000 to £40,000), and Barratts did indeed have a total write downs of £640.7 million in 2008 and 2009 (see Note 18 to the 2009 accounts). This is only about £13,000 write down per plot, on average, but as stocks are carried at lower of cost and net realisable value, this is not surprising (i.e. if they were bought for £53,000 on average, they were never 'written up' to £100,000 each in the first place).

3. This implies that the cost of building a home, including their profit margin, was £66,500 (£166,500 minus £100,000) in 2009, which seems about right, seeing as it was a mix of houses (about £80,000 each) and flats (about £50,000 each). But is now about £145,000 (£185,000 minus £40,000)? How on earth can the selling value of the bricks and mortar more than double in the space of a year or two, even if we factor in the effect of building more houses and fewer flats?

Answers on a postcard.