Property developers/housebuilders going bust

[Ash4781b]

15 hours ago, spunko said:

I dont understand how you can run a business with 30-40% profit margin, to bust, just because demand has dropped. Even if there is zero demand / sales, you should have enough in the kitty to tide you over - they make literally millions in profit for even a small development of ~10 houses.

I vageuly know a property developer who builds about 50 houses a year, he has recently knocked down his house that he bought for £1.3m to rebuild some McMansion. Bet hes bricking it now....

It’s all about cashflow. If the demand shock is sudden then management action don’t have enough time to adjust strategy. One would still have all fixed overhead costs, then would have cash tied up in assets probably stock  (stock  might be various stages half built houses,foundations etc). The issue now is that we have high inflation so that’s a big pricing risk and there’s also probably a demand shock in at least house building. I expect builders reverting to land banking so retrench to a smaller business building fewer house volumes. It could get quite messy though I have not seen if gross margins are holding up. What are insurance rebuild values like? 

[sleepwello'nights]

A builder local to me had a profitable business dealing in repairs and general building work. He completed a successful conversion of a small hotel into residential dwellings. Not that large, completed and sold into the covid price boom. I don't have any figures but looking at the sold prices his profit from the scheme I reckon he would have made close on £1 million, after tax. 

Its all gone now less than two years later and the venture he diversified into alongside his building work is being liquidated by a receiver. He's going to have to go back to being a jobbing builder just as construction is slowing and he'll have to compete with more competent tradesmen. 

A £million is more than I have in retirement and saved/invested sensibly would give me more than enough financial stability. 

[Bilbo]

This one from last week but I  sometimes get news from Construction News and plenty are getting into trouble.

https://www.edp24.co.uk/news/23923001.lowestoft-based-wellington-construction-appoints-liquidators/

One of my family runs small builders only work till this Wednesday. Another contact was running eight gangs now down to three. Chap a few doors down set up as handy man before COVID now at home most of the week. 

Shit approaching fan mega speed!

I have a couple of jobs that I want to do on my house but won't pay the rip off prices for workmen to stand and chat on the mobile phones and f off before four o'clock.

 

[Stuey]

18 minutes ago, Bilbo said:

This one from last week but I  sometimes get news from Construction News and plenty are getting into trouble.

https://www.edp24.co.uk/news/23923001.lowestoft-based-wellington-construction-appoints-liquidators/

One of my family runs small builders only work till this Wednesday. Another contact was running eight gangs now down to three. Chap a few doors down set up as handy man before COVID now at home most of the week. 

Shit approaching fan mega speed!

I have a couple of jobs that I want to do on my house but won't pay the rip off prices for workmen to stand and chat on the mobile phones and f off before four o'clock.

 

Can't imagine much work is getting done in the soggy & cold months normally? 

[Bilbo]

51 minutes ago, Stuey said:

Can't imagine much work is getting done in the soggy & cold months normally? 

You have led a sheltered life!

[One percent]

Oh dear

https://www.dailymail.co.uk/money/mortgageshome/article-12863671/Most-buyers-think-older-homes-better-new-builds-report-says.html

Over half of 2,000 Britons surveyed think older houses are better than new-builds, a report by the Chartered Institute of Building suggests. 

Thirty-two per cent of those surveyed said they believed new-build homes were 'poor quality', and 60 per cent said they would not buy a new-build home.

Forty-eight per cent said new-builds were 'overpriced', while 41 per cent claimed newly built properties 'lack character.' 
 

Poor workmanship, structural issues, hidden costs and lack of nearby infrastructure were all flagged as concerns among the survey's respondents. 
 

Thirty-three per cent of respondents expressed a 'low level of trust' in housebuilders' ability to create decent quality new homes.

Significantly, 11 per cent of the 659 respondents who expressed a low level of trust in housebuilders had purchased a new-build home in the last year.

The CIOB said: 'Ultimately the perception of poor-quality housing has resulted in a nervousness from some to trust housebuilders to deliver on their commitments.' 

It added: 'Concerns around poor workmanship account for a significant proportion of responses and, while work has been done to ensure that quality is placed at the forefront of the construction process, well-publicised mistakes have led to a concern with the quality of work of construction professionals.' 

 

[spunko]

https://www.theargus.co.uk/news/23992187.saltdean-coombe-farm-development-halted-company-goes-bust/

[With a crooked smile]

On 20/11/2023 at 11:36, Stuey said:

Can't imagine much work is getting done in the soggy & cold months normally? 

Apparently they have difficulties getting builders in the Highlands in the summer due to midges. If they get raining off as well when do they work?

[spunko]

On 14/12/2023 at 16:02, One percent said:

Oh dear

https://www.dailymail.co.uk/money/mortgageshome/article-12863671/Most-buyers-think-older-homes-better-new-builds-report-says.html

Over half of 2,000 Britons surveyed think older houses are better than new-builds, a report by the Chartered Institute of Building suggests. 

Thirty-two per cent of those surveyed said they believed new-build homes were 'poor quality', and 60 per cent said they would not buy a new-build home.

Forty-eight per cent said new-builds were 'overpriced', while 41 per cent claimed newly built properties 'lack character.' 
 

Poor workmanship, structural issues, hidden costs and lack of nearby infrastructure were all flagged as concerns among the survey's respondents. 
 

Thirty-three per cent of respondents expressed a 'low level of trust' in housebuilders' ability to create decent quality new homes.

Significantly, 11 per cent of the 659 respondents who expressed a low level of trust in housebuilders had purchased a new-build home in the last year.

The CIOB said: 'Ultimately the perception of poor-quality housing has resulted in a nervousness from some to trust housebuilders to deliver on their commitments.' 

It added: 'Concerns around poor workmanship account for a significant proportion of responses and, while work has been done to ensure that quality is placed at the forefront of the construction process, well-publicised mistakes have led to a concern with the quality of work of construction professionals.' 

 

I would love a new build if a) it had loads of land and isnt overlooked and b) has been built well.

But the odds of finding both of these in a property that costs less than £1m are slim.

[onlyme]

On 20/11/2023 at 11:18, Bilbo said:

This one from last week but I  sometimes get news from Construction News and plenty are getting into trouble.

https://www.edp24.co.uk/news/23923001.lowestoft-based-wellington-construction-appoints-liquidators/

One of my family runs small builders only work till this Wednesday. Another contact was running eight gangs now down to three. Chap a few doors down set up as handy man before COVID now at home most of the week. 

Shit approaching fan mega speed!

I have a couple of jobs that I want to do on my house but won't pay the rip off prices for workmen to stand and chat on the mobile phones and f off before four o'clock.

 

If the small number of builders I know are of any comparison those builders just 2 years ago would have been booked out min 6 months and more like a year or two years in advance, not least due to some specialist materials being on that sort of lead time alone.

 

[onlyme]

On 14/12/2023 at 16:02, One percent said:

Oh dear

https://www.dailymail.co.uk/money/mortgageshome/article-12863671/Most-buyers-think-older-homes-better-new-builds-report-says.html

added: 'Concerns around poor workmanship account for a significant proportion of responses and, while work has been done to ensure that quality is placed at the forefront of the construction process, well-publicised mistakes have led to a concern with the quality of work of construction professionals.' 

 

Doesn't matter how much concern you concentrate on a minimal / flimsy timber frame with brick outer skin, engineered laminate joists and acres of plasterboard, if that is what you build it isn't going to fundamentally change the nature of what it is.

[Bobthebuilder]

28 minutes ago, spunko said:

I would love a new build if a) it had loads of land and isnt overlooked and b) has been built well.

But the odds of finding both of these in a property that costs less than £1m are slim.

This might be perfect for you, new build mansions all on top of each other, built on a flood plain as well.

6 bedroom detached house for sale in Julians Road, Wimborne, BH21 1EF, BH21 (rightmove.co.uk)

 

[spunko]

4 minutes ago, Bobthebuilder said:

This might be perfect for you, new build mansions all on top of each other, built on a flood plain as well.

6 bedroom detached house for sale in Julians Road, Wimborne, BH21 1EF, BH21 (rightmove.co.uk)

 

Why would you buy that shitty shoebox when you could buy something like this for similar money?

https://www.rightmove.co.uk/properties/131977703#/?channel=RES_BUY

Edited December 17, 2023 by spunko

[Bobthebuilder]

1 minute ago, spunko said:

Why would you buy that little shitty shoebox when you could buy something like this for similar money?

https://www.rightmove.co.uk/properties/131977703#/map?channel=RES_BUY

That is stunning.

The Dorset one just shows you how big the bubble has inflated since covid in the south west.

[One percent]

19 minutes ago, spunko said:

Why would you buy that shitty shoebox when you could buy something like this for similar money?

https://www.rightmove.co.uk/properties/131977703#/?channel=RES_BUY

I love that but can you imagine the heating bill?   

[spunko]

1 hour ago, One percent said:

I love that but can you imagine the heating bill?   

I dont think people who live in houses like that worry about such things. Or maybe they only heat certain rooms.

[spunko]

Also, I've always thought, why don't people who live in houses like that spend ~£30k on a solar panel + battery system? Pretty sure if you go down this route, in the SE anyway, there's enough energy generated even in winter to replace your elecricity. Would still need to pay maybe £1,500 a year on heating oil but that's not too bad for a £2.5m house.

[One percent]

15 minutes ago, spunko said:

Also, I've always thought, why don't people who live in houses like that spend ~£30k on a solar panel + battery system? Pretty sure if you go down this route, in the SE anyway, there's enough energy generated even in winter to replace your elecricity. Would still need to pay maybe £1,500 a year on heating oil but that's not too bad for a £2.5m house.

Im getting nothing off my panels atm.  The sun has not been out. Today was probably the best for a few weeks and I got 3.3kwh. 

[spunko]

5 minutes ago, One percent said:

Im getting nothing off my panels atm.  The sun has not been out. Today was probably the best for a few weeks and I got 3.3kwh. 

Yeah but you live oop north Here it has been sunny for maybe 3-4 hours.

Also if you have a battery, from what I understand, you can save it up for another day.

[onlyme]

3 hours ago, spunko said:

Yeah but you live oop north Here it has been sunny for maybe 3-4 hours.

Also if you have a battery, from what I understand, you can save it up for another day.

Going by the standard curves these suggest output (well some representation of ambient light based output) of around 1/5 of peak summer. In practice dead of winter going to get very little at all, finger in the air 1/10th of rated ouput is much more realistic in the worst months. Swing months in spring / autumn and summer all good, a decent solar setup will offset electricity needs. Heating probably needs around 4 or 5x the amount of total energy compared to running a few appliances and lighting - something else altogether in terms of getting a suitable replacement as some inappropriately installed air sourced heat pump users have found.   

[No One]

Medium size builders is not a good thing on the long term. Based on the video from MHC on this topic, builders that go bust never come back nor get replaced, and then we get a more entrenched and monopolized market.

The volume of the big builders has basically stayed the same over time.

We can speak about quality etc, but the main issue is the planning process, which is made in such a way so as to restrict supply for the benefit of those who have housing already and to the detriment of aspiring owners.

[onlyme]

Oops. You can ask what you like but doesn't mean that is what you are going to get.

 

 

[spygirl]

On 04/11/2023 at 07:05, Ash4781b said:

It’s all about cashflow. If the demand shock is sudden then management action don’t have enough time to adjust strategy. One would still have all fixed overhead costs, then would have cash tied up in assets probably stock  (stock  might be various stages half built houses,foundations etc). The issue now is that we have high inflation so that’s a big pricing risk and there’s also probably a demand shock in at least house building. I expect builders reverting to land banking so retrench to a smaller business building fewer house volumes. It could get quite messy though I have not seen if gross margins are holding up. What are insurance rebuild values like? 

I think it is.

Everty 2 - and half an horse town- seems to have been forced to let house building let rip.

In most ares theres nither the demand or the moeny.

Yet build they did.

Scabby has a two big developments going on - 

Middle Deepdale which is way too closer to scumholes  of Eastfield

 

However, council reports show 60 affordable homes have been completed and occupied following the reserved matters approval in 2015. In 2013, the development was given outline permission for up to 1,350 homes.

https://www.thescarboroughnews.co.uk/news/politics/council/scarborough-council-approves-400-homes-plan-as-issue-raised-over-health-services-3564141

Keepmoat Homes has been granted approval for a trio of reserved matters applications for a total of 357 properties at the Middle Deepdale development in Eastfield which is in its seventh year of construction and will eventually see around 1,350 new homes built.

A fourth application for full planning permission for 64 homes at the site has also been approved by Scarborough Borough Council’s planning committee yesterday, February 10.

There's two lots of builders.

Millfield Park - 

https://www.thescarboroughnews.co.uk/news/heres-the-decision-on-plans-for-400-more-homes-at-the-high-mill-estate-at-scalby-1367162

Another 400.

Now, they are not building them all at once.

However there's just not the money to clear the house they've built.

The radio ads are getting desperate.

One earlier smaller site, Oilvers Heights,  crashed mid way thru development in 2008, leaving ~80 out of 250 homes unfinished,

Place is shitehole - insta-slum, with all the IO BTL brigade and social housing piling in.

Again, built near one of the shitier estates.

https://houseprices.io/?q=YO12+4AU&p=5

 

My point- building firms must have a lot of cash tied up with property til they sell.

Without the HTB bung new builds are not selling.

Wrose, the new builds from the last  ~15y are not selling either.

 

 

[sancho panza]

5 hours ago, onlyme said:

Oops. You can ask what you like but doesn't mean that is what you are going to get.

 

 

What software is he using for the price sale data

[onlyme]

3 minutes ago, sancho panza said:

What software is he using for the price sale data

He referes to his own a lot , he has been producing software for agencies for a long time, has access to their data and part of what he is doing now is creating a price index that relates to actual sale prices in advance of the delayed land reg stats as well as analysis of listed vs sale price.

His comment on the market and listings data makes interesting readng (back from 2022).

https://bestagent.co.uk/house-price-statistics-one-million-anecdotes/

A little bit specifically about his HP index.

https://bestagent.news/