[/quote]You can bet your bottom dollar that if the demand was there (demand = people with the money actually in a position to buy) then the housebuilders would be building like there was no tomorrow. As it is though they sit on those vast plots of land they have bought and do very little. No point building houses that will not sell is there?
the problem for the housebuilders is they paid too much for their landbanks (funded by the silly prices they were getting for their houses as newbuilds were always overvalued) so that if they build now the margins are no longer so cozy. even the dubious shared ownership/rent-buy schemes aren’t going to dig them out of that hole.
they are now partly in negative equity of their own making
article in the independent
[/i]We’re in for a decade of stagnation.”
This stagnation is why the huge numbers of homes promised won’t actually be built. As a result of restrictions placed on development in the past 20 years, the market has been dominated by half a dozen developers who make their money from high profit margins on the sale of a limited number of homes; builders such as Barratt, Persimmon, Bovis, Redrow, Taylor Wimpey and Berkeley Homes.
When prices were rising, the model worked by developers buying land and waiting for prices to go up. Now the music has stopped, house prices are flat, and developers are left with planning permission sufficient for nearly 300,000 units – but on land bought at the top of the market. Until prices rise, they can’t realise their assets. The business model developers have relied on for decades is broken.
There is another problem. In a market where land was scarce, developers became fixated by rising land costs financed by squeezing every last drop of profit from each unit. As Harry Rich, the head of Riba, the architecture industry body, said last week: “Thousands of shameful shoe-box homes are being churned out all over the country.”
