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marketrent OP t1_jbedvx3 wrote
Findings in title quoted from the authors’ linked content.^1,2
From the linked summary:^1
>Our research compared 22 publicly available national datasets, looking at the period between 1998 and 2020.
>One of the datasets is known as gross fixed capital formation (GFCF) of new homes, which is published by the Office for National Statistics and reflects the sale prices of new houses minus the land prices.
>It includes the costs of things like labour, materials and subcontractors, plus whatever profit the builder makes from the sale.
>We also compared GFCF per dwelling to the Royal Institute of Chartered Surveyors’ (RICS) index.
>We were able to calculate land prices by working out GFCF per new dwelling and deducting this from the average price of new houses in a given year.
>This clearly demonstrated that the land price per house has flatlined since 1998 at £48,000 per home, per the graph below (land prices are the green line).
From the peer-reviewed paper:^2
>Prices of components, other than land value, are obtained from gross fixed capital formation data and construction output.
>When corrected for inflation, these have risen by factors of 1.7 and 2.0, respectively, over 1998–2018.
>By including the self-employed, the total labour per new-build private dwelling is derived which has risen 2.4 to 3.0 man-years over 2011–2020.
>Since 2000, construction companies’ gross operating surplus per job has risen much faster than compensation of employees per job.
>This extra gross operating surplus, which can be associated with profit, totalled £11.6b in 2019 reaching £70k (at 2016 prices) per new private dwelling in 2019.
>Rising prices have created the opportunity for housebuilders to extract larger profits.
^1 Builders are making thumping profits by over-charging for new homes – new findings, Simon Roberts and Colin Axon, 7 Mar. 2023, https://theconversation.com/builders-are-making-thumping-profits-by-over-charging-for-new-homes-new-findings-200750
^2 Roberts, S. and Axon, C. (2022) Analysing the rising price of new private housing in the UK: A national accounting approach. Habitat International 130 102690. https://doi.org/10.1016/j.habitatint.2022.102690
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[deleted] t1_jbenbpc wrote
[removed]
chabybaloo t1_jbf39mq wrote
I've not read the article
But land owners put the value on the plot based on what can be built on it.
Some even get out line planning permission so they can charge the developer more.
Compulsory purchase orders or the threat of them works differently.
goobershank t1_jbgkc8c wrote
well, yeah. Wouldn't every measure of price increase with inflation? Their costs go up too.
War_Hymn t1_jbi5ob7 wrote
I think you need to recheck the definition of profit.
goobershank t1_jbjm6wi wrote
well, if their profits were 3% of whatever amount they spent, then the inflation hits and now its 3% of the new inflation amount, then of course the "profits" would naturally be higher.
jeffend1981 t1_jbeemsh wrote
Wow really? You mean in an overinflated housing market, people who build and own properties are making more money from them?