tag:blogger.com,1999:blog-1141932539860553199.post1154419286910426639..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: "That's partly down to ... the way property developers work." Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-1141932539860553199.post-3757297885042629652015-11-03T21:39:35.871+00:002015-11-03T21:39:35.871+00:00All. Point of information. All small developers s...All. Point of information. All small developers seem to hold between 1 and three years stock of plots. I think that this is the result of a set of sums including factors like the cost of finance, time it takes to build and sell and house/flat, resource availability (labour, materials), good plots etc. In fact the classic 'entrepreneurs' guessing about the future.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-19124808270734623632015-11-03T17:33:38.062+00:002015-11-03T17:33:38.062+00:00"You are always saying that the house prices ..."You are always saying that the house prices are not affected by supply and demand."<br /><br />That is simply not true. We have always acknowledged that supply and demand has some effect, but that it is a micro, not a macro effect, thus if a developer puts 200 houses onto the market at the same time, they will take a long time to sell, as, outside London*, it is unlikely that there are sufficient buyers who want to live in that location. The developer can increase the number of potential buyers by lowering the prices of his houses, but he is unlikely to do that, because it will cut into his profits and will affect the value of the remaining plots, against which he has probably borrowed money. So the developers release the houses onto the market at the optimum rate given the demand in the locality, which has the added benefit that it helps the cash-flow. You seem to think that "drip feeding" and "building and selling in the shortest time possible" are mutually exclusive, when in fact, they are the reverse. That's the micro bit.<br /><br />However, putting 200 houses on the market in one town is not really going to affect prices in the next town very much. That's the macro bit. In the past, building booms, e.g 1960s and 70s, have been accompanied by rises, not falls in house prices.<br /><br />*inside London, the areas where demand is at its highest is already built up, so it is simply not physically possible to increase the supply to any meaningful level vis a vis demand.Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-18504241675104815422015-11-03T15:49:08.697+00:002015-11-03T15:49:08.697+00:00A, and how do you explain the shopping centre/flea...A, and how do you explain the shopping centre/flea market in Russia somewhere made out of $100 shipping containers? The more he added to the sit, the higher the rents went. I know the answer - do you?<br />Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-48343002974092904022015-11-03T15:45:11.306+00:002015-11-03T15:45:11.306+00:00L, agreed.
A, if the simplistic "supply and ...L, agreed.<br /><br />A, if the simplistic "supply and demand" rule applied, then why are land and buildings most expensive in the areas where there are the most land and buildings? Why is London more expensive than the Highlands of Scotland?<br />Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-87997340121616425832015-11-03T15:36:00.239+00:002015-11-03T15:36:00.239+00:00No developers do not drip feed properties they are...No developers do not drip feed properties they are just as influenced by supply and demand as everyone else. For them building and selling in the shortest time possible is always their goal. It may look like they are drip feeding but although the building of a home is considerably faster than in the past it is still a relatively slow process. Unlike other industries that can mass produce quickly developers cannot as yet. No doubt in time mass production will become possible a by product of which will be in bringing down construction costs considerably so making homes cheaper. We cannot mass produce land but we can make more of it available so if supply goes up prices will come down.<br /><br />You are always saying that the house prices are not affected by supply and demand. That is simply not true. Antistheneshttps://www.blogger.com/profile/10120647617145756102noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-37657940010789739362015-11-03T14:56:19.125+00:002015-11-03T14:56:19.125+00:00'Developers' do the 'organisation'...'Developers' do the 'organisation' bit. But, as you say, they, or more likely the landowner they buy the land from, make a lot of money off location. And that's where LVT comes in. If they were paying LVT on the site value - i.e. the house plot value - they'd be incentivised to get properties sold. Apropos of which I think that this would lead to much lower stocks of plots. In that there'd be a spree of building on the introduction of LVT as they tried to reduce their plot stock. It's probable that all spec house builders would end up with about 2 years stock of plots (like small developers currently do), as opposed to the approximate 10 years stock that large developers hold.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.com