From the BBC:
People looking for a new house are being told they could save thousands of pounds by buying one that is made in a factory. A new report says prefabricated homes are very different to those of 60 years ago. They last longer, buyers can get a mortgage on them and they are 10% cheaper to buy, the report says...
According to the Royal Institution of Chartered Surveyors (Rics), such units can cost far less than conventional houses. Chris Goodier [of Loughborough University] has completed a report about the market. In a report out this week, it said that a basic home unit could now be purchased for as little as £30,000, plus the land.
The £30,000 figures is probably accurate. As we well know, the actual cost of building a three-bed semi (bricks and mortar cost plus share of roads, utilities etc) is somewhere in the region of £50,000 to £70,000 (depending on whom you believe), a large part of which is the cost of red tape etc. There's no reason to assume that pre-fab houses are of lower quality than traditional bricks and mortar houses (aren't bricks and mortar 'pre-fabricated'? It's all a question of where the bits and pieces are assembled into the shape of a house).
The key is the throwaway remark at the end, "plus the land". The actual production cost of the land itself is of course precisely zero, it's just there and always has been, the problem is the monopoly price of land. Land in desirable areas is limited because there is a limited amount of land in desirable areas; and where there is plenty of land, i.e. at the edge of existing towns and cities, we have something called The Hallowed Greenbelt.
Round my way, for example, you can snap up a two-bedroom static caravan with permission for normal residential use, the actual build cost of which is probably somewhere in the region of £30,000, but the monopoly price of the patch of land on which it stands and the hankerchief sized lawn in front of it adds a cool £95,000 to the price. At a rough guess, that plot is ten yards by ten yards, so that's £950 per square yard:
Saturday, 29 January 2011
Pre Fab Fun
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6 comments:
The business about pre-fab/built on site is a bit of a red herring. These issues are actually quite complicated and are regularly rehersed in the self-build press blogs. Essentially what you are hearing is a version of the timber frame (pre fab) v masonary argument. In reality no house is wholly one or the other and there is usually very little difference in terms of cost or time whichever way you go prefab has greater captial cost, masonary greater labour cost.
You are absolutely right though. The land cost and the hidden costs of utility connections, landfill tax and permission and'compliance' costs are easily the highest (and most troublesome)
Mark Brinley's excellent Housebuilders' Bible and website http://web.mac.com/markbrinkley/Mark_Brinkley.net/Home.html has a lot more detail.
I am an occasional watcher of Grand Designs. The cutting edge one-off architect-designed wonders they show on that programme rarely cost more than around £200,000 to build (plus the land). £30,000 for an industrially produced house sounds perfectly reasonable.
My flat is insured for a reconstruction cost of £100,000 - approximately half the market value of it plus the "land".
In certain unfashionable parts of commuter outer London two bed flats can be obtained for £100,000.
If only people were allowed to build homes there would not be a housing crisis.
If you become a 'traveller' you can avoid the cost of the land.
You get a protected EU victim status to boot.
I'm starting to think it makes sense, you can buy a second hand caravan and tow car for well under £10k.
Anon, BE, ta for back up.
SL, yes, that's another of my favourite thought experiments - what if we all lived in caravans? If the local council got too cheeky with pitch fees (or if the area got too rough), then we'd pitch up and move somewhere else.
But seeing as a large part of what you pay for is 'nice neighbours', and assuming that wealthy people want to live among wealthy people (for prestige reasons), then they will be happy to rent an expensive pitch in a posh area, even though the services provided are no better than in a rough area, so the council can increase its income by simply increasing site fees for desirable sites - this filters out the not-so-wealthy people so the prestige attached to that address is worth even more.
"and where there is plenty of land, i.e. at the edge of existing towns and cities, we have something called The Hallowed Greenbelt."
Well, no. Land is geographically limited wherever you are. There is a fixed amount of land 10km from the centre of London and that is going to push its price up, green belt or no green belt.
Is there actually any evidence to show that the establishment of the green belt actually increased prices anywhere other than in the green belt itself and areas nearby (which it would naturally do - people would want to live in or near the green belt simply because it's the green belt i.e. nice "countryside" relatively close to London)?
Only 10% cheaper? And such an eyesore.
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