Construction output down 11.6% y-o-y August

[crankedup]

Digga said:

Derek Chevalier said:

How do you define "huge demand" for housing? Could the same be said of Ferrari 458s?

Agree with the sentiment, but I think we are entering a new era - affordability in terms of both salary multiples for 'starter' homes and availability (or the deposit requirements of) mortgages have not been this tough for some time - that will alter the economy.

Multiples earnings 'in my day' starting out first timer were x2 salary OR 1.5 joint income. That was it, no if's or buts, repayments only, no choice other than years repaid. Seems to me that was a good system.

[Digga]

anonymous said:

[redacted]

Agreed. On the whole, banks have decided that whatever the backroom boys do in the 'casino department' the retail side is resolutely risk-free. This is not how things were and is a major step-change in the system.

As we've all discussed on the House Price thread, a good, old-fashoined crash would have sorted the issue, but frankly a lot of banks would actually themselves be wiped out by this, so we're left to drift on this topsy-turvy, becalmed sea of unrealistic prices.

[Derek Chevalier]

Digga said:

Derek Chevalier said:

How do you define "huge demand" for housing? Could the same be said of Ferrari 458s?

Agree with the sentiment, but I think we are entering a new era - affordability in terms of both salary multiples for 'starter' homes and availability (or the deposit requirements of) mortgages have not been this tough for some time - that will alter the economy.

And that new era is because the Government has taken the option of preventing the unwinding of the housing bubble.
However, as we are starting to see....

http://www.dailymail.co.uk/news/article-2222737/Mi...
http://www.telegraph.co.uk/finance/newsbysector/ba...

"The Bank has estimated that as much as 8pc of UK mortgages are in forbearance, equivalent to about £100bn of debt."


property wasn't affordable in the run up to 2007, and nothing has really changed, so I don't see the point of "assisting" FTBs onto the ladder - they will be stuck in their starter home for decades.

[Derek Chevalier]

crankedup said:

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

Residential? Are you serious? Do you not think they are being backed enough? And what are you really solving - shifting the debt incurred from paying too much for land from developers to FTBs? The kind of thing the Government would do, er, are doing.

Yes I'm serious of course. I'm not focused on the debt incurred by the gung ho developers who bit off my then they could chew. Haven't good practice developers enjoyed enormous profits from the past forty years. People still need houses to live in, debt will always be involved its the management of debt thats been the problem. If developers have overpaid for land the they will take a hit whether they hold or sell. Seems to me that immunity from this crisis is limited to the banks only.
Obviously I am not a developer but it seems to me that it is confidence that is shattered in both business and consumer, with both sat on a fence. At some point the Government has to continue in larger scale some underwriting.

Why should I pay for developers to get off the hook and load FTBs with more debt? "If you build it (for a reasonable price), they will come" is my belief (with apologies to Field of Dreams). The Government subsidising the market is just a fudge, and isn't addressing the issue, which is that the unprecedented housing bubble has not unwound, and the Government know exactly why.

Maybe I have the wrong end of the stick here, I thought that developers had purchased land stocks and were now holding those stocks until such time the market 'frees up'. Standard practice except in the past developers held land stocks helping to increase profit, seems fair business practice. Now the tables have turned and developers are stuck with currently depreciating assets, unwilling to put builds into production owing to a shortage of buyers.

There may be a shortage of buyers willing/able to pay the price developers are having to charge based on what they paid for land, but why is that our problem? The Government should stop interfering in certain areas and let the economy adjust.

[crankedup]

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

Residential? Are you serious? Do you not think they are being backed enough? And what are you really solving - shifting the debt incurred from paying too much for land from developers to FTBs? The kind of thing the Government would do, er, are doing.

Yes I'm serious of course. I'm not focused on the debt incurred by the gung ho developers who bit off my then they could chew. Haven't good practice developers enjoyed enormous profits from the past forty years. People still need houses to live in, debt will always be involved its the management of debt thats been the problem. If developers have overpaid for land the they will take a hit whether they hold or sell. Seems to me that immunity from this crisis is limited to the banks only.
Obviously I am not a developer but it seems to me that it is confidence that is shattered in both business and consumer, with both sat on a fence. At some point the Government has to continue in larger scale some underwriting.

Why should I pay for developers to get off the hook and load FTBs with more debt? "If you build it (for a reasonable price), they will come" is my belief (with apologies to Field of Dreams). The Government subsidising the market is just a fudge, and isn't addressing the issue, which is that the unprecedented housing bubble has not unwound, and the Government know exactly why.

Maybe I have the wrong end of the stick here, I thought that developers had purchased land stocks and were now holding those stocks until such time the market 'frees up'. Standard practice except in the past developers held land stocks helping to increase profit, seems fair business practice. Now the tables have turned and developers are stuck with currently depreciating assets, unwilling to put builds into production owing to a shortage of buyers.

There may be a shortage of buyers willing/able to pay the price developers are having to charge based on what they paid for land, but why is that our problem? The Government should stop interfering in certain areas and let the economy adjust.

Its our problem as the construction industry is so deeply in-twinned with a huge variety of consumer goods. + if the Government had not 'interfered' in the banking malaise we would all be bankrupt now, sometimes Governments have to take a hands on lead to help keep the Country afloat. We need a freed-up housing market for all the obvious reasons, if developers sit on land because they paid too much money for it I suggest they are in for a long wait to recoup that outlay. IMHO the Government needs to inject some pace into the social house building, house people and get builders back into work. Letting the economy adjust without Government guidance is not an option this time around. The Country is in far too much financial difficulty to take this option.

[Digga]

More here: http://www.theconstructionindex.co.uk/news/view/gl...

FWIW though construction is always first into recession and last out. Even I know that.

[crankedup]

Digga said:

More here: http://www.theconstructionindex.co.uk/news/view/gl...

FWIW though construction is always first into recession and last out. Even I know that.

Thanks for interesting link. So far as the housing construction section is concerned I have always thought it was this that was the main driver out of a recession. I note in the link it refers to construction being first in and last out, as you mention in your post. However, certainly following WW2 it was construction of houses that brought us out of the doldrums as it did in more recent history. Yet this seems to suggest that is not the case, I am surprised by this as even this year it has been stated that the housing sector would again help bring us out of the recession.

[don4l]

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Don
--

[Digga]

crankedup said:

following WW2 it was construction of houses that brought us out of the doldrums as it did in more recent history.

Even New Labour managed not to get us blitzed. I guess that's something to do with that anomaly in the 50's.

don4l said:

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Happy? Well I guess there are some hare brained schemes to get LA pensions to keep the property price bubble topped up...

Edited by Digga on Friday 26th October 16:52

[_Batty_]

I have heard on good authority, that a few 'local' councils planners have been told to provide the 'minimum statuary required planning service'.
Thats going to help get houses built no end! Very difficult out there currently to get anything through.

[Digga]

Planners are slow even when they appear to be trying to make things happen...

[crankedup]

don4l said:

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Don
--

Perhaps I will be personally more happy when interest rates begin to rise and see some return on cash deposits!
But that would be selfish and see thousands of over mortgaged people go bust.

[Derek Chevalier]

crankedup said:

Its our problem as the construction industry is so deeply in-twinned with a huge variety of consumer goods. + if the Government had not 'interfered' in the banking malaise we would all be bankrupt now, sometimes Governments have to take a hands on lead to help keep the Country afloat. We need a freed-up housing market for all the obvious reasons, if developers sit on land because they paid too much money for it I suggest they are in for a long wait to recoup that outlay. IMHO the Government needs to inject some pace into the social house building, house people and get builders back into work. Letting the economy adjust without Government guidance is not an option this time around. The Country is in far too much financial difficulty to take this option.

crankedup said:

sometimes Governments have to take a hands on lead to help keep the Country afloat

But all we are doing is shifting debt from one group of people to another??

crankedup said:

We need a freed-up housing market for all the obvious reasons

The only way to do this is to let the housing market adjust, cease forebearance, make banks realise their bad debt and raise interest rates. What method did you have in mind?

crankedup said:

if developers sit on land because they paid too much money for it I suggest they are in for a long wait to recoup that outlay.

So why is that the Government's problem?

crankedup said:

IMHO the Government needs to inject some pace into the social house building, house people and get builders back into work

Who is going to pay for this?

crankedup said:

The Country is in far too much financial difficulty to take this option.

And taking on more debt is the only option?

[Derek Chevalier]

crankedup said:

don4l said:

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Don
--

Perhaps I will be personally more happy when interest rates begin to rise and see some return on cash deposits!
But that would be selfish and see thousands of over mortgaged people go bust.

How many years should they have to get themselves out of trouble?

[don4l]

crankedup said:

don4l said:

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Perhaps I will be personally more happy when interest rates begin to rise and see some return on cash deposits!
But that would be selfish and see thousands of over mortgaged people go bust.

Cash deposits have never shown real returns.

Interest rates on savings accounts must always be less than inflation. Think about it.

Don
--

[vonuber]

Cheer up: they are now thinking of scrapping the building regs:
http://www.guardian.co.uk/politics/2012/oct/26/gov...

[martin84]

Do Dave and Co really think the reason stuff isn't getting built is providing wheelchair access is too tricky?

[Derek Chevalier]

don4l said:

crankedup said:

don4l said:

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Perhaps I will be personally more happy when interest rates begin to rise and see some return on cash deposits!
But that would be selfish and see thousands of over mortgaged people go bust.

Cash deposits have never shown real returns.

Interest rates on savings accounts must always be less than inflation. Think about it.

Don
--

I have thought about it and can't see why you think negative real interest rates are norm?

http://www.bondvigilantes.com/blog/2011/03/22/why-...

[crankedup]

Derek Chevalier said:

crankedup said:

Its our problem as the construction industry is so deeply in-twinned with a huge variety of consumer goods. + if the Government had not 'interfered' in the banking malaise we would all be bankrupt now, sometimes Governments have to take a hands on lead to help keep the Country afloat. We need a freed-up housing market for all the obvious reasons, if developers sit on land because they paid too much money for it I suggest they are in for a long wait to recoup that outlay. IMHO the Government needs to inject some pace into the social house building, house people and get builders back into work. Letting the economy adjust without Government guidance is not an option this time around. The Country is in far too much financial difficulty to take this option.

crankedup said:

sometimes Governments have to take a hands on lead to help keep the Country afloat

But all we are doing is shifting debt from one group of people to another??

crankedup said:

We need a freed-up housing market for all the obvious reasons

The only way to do this is to let the housing market adjust, cease forebearance, make banks realise their bad debt and raise interest rates. What method did you have in mind?

crankedup said:

if developers sit on land because they paid too much money for it I suggest they are in for a long wait to recoup that outlay.

So why is that the Government's problem?

crankedup said:

IMHO the Government needs to inject some pace into the social house building, house people and get builders back into work

Who is going to pay for this?

crankedup said:

The Country is in far too much financial difficulty to take this option.

And taking on more debt is the only option?

The points you raise are the replies to the classic Labour v Conservative argument at National level.

1. Shifting debt from one group to another is the corner post of commercial democracy and capitalism.
2. I completely disagree with allowing the housing market to adjust to its market level. Although I am in favour of a controlled unwinding during the next decade or two. My reasons for this is simply allowing the market to freefall will cause untold bankrupt families and businesses holding debt against property.
3.Manipulation of the housing market could be achieved by several interferences, increase social house build, improve home ownership financial incentives to first time buyers, free up planning reg's, more use of high tech building methods and materials.
4. Taking on more debt is not the answer of course but imaginative thinking behind spending budgets currently available is. More in work less on dole and more taxes.
All I see as a reward for our austerity is ever growing unemployment, after the temps and part time jobs are taken out of the stats, dropping of tax revenues, less consumer spending, and the spiral going down in ever quickening circles. Lets not forget that the banks have about 30/40% accountability to the situation we find ourselves in, more taxation in that direction in the shorter term.

[crankedup]

don4l said:

crankedup said:

don4l said:

Recession is over, unemployment is down and inflation is falling.

Shouldn't everyone be happy?

Perhaps I will be personally more happy when interest rates begin to rise and see some return on cash deposits!
But that would be selfish and see thousands of over mortgaged people go bust.

Cash deposits have never shown real returns.

Interest rates on savings accounts must always be less than inflation. Think about it.

Don
--

That is true and I do appreciate that fact, its why I have a very mixed portfolio for our savings. But it still irks when I see almost zero returns whilst subsidising the idiots who over mortgaged themselves and now enjoy very low interest rate mortgages. But it not just me irked over the derisory rate of cash saving interest, it affects tens of thousands of pensioners being hit with decreasing amounts on their money and have not got the option perhaps of longer term better rate savings/investment vehicles they could use, ie age against them.