As developers suffer from plummeting sales volumes their shares have been dropping in sympathy. Quoted Companies like Bovis, Barretts and Taylor Wimpey are often cited as candidates for take over or worse – for the skip!
For years we have been brought up being told that we’re an island and they aren’t making enough new homes to satisfy the increasing population. On top of that second home owners and the buy-2-let brigade make increasing demands both of new and second hand housing stock so where’s the demand gone?
The simple if unpalatable answer is that the demand is still there but people can’t borrow money to buy what they want. Figures from the Counsel of Mortgage Lenders confirm that in May there were almost exactly half the number of mortgages offered to 1st time buyers as there were in May last year. About 39,000.
So what are the developers to do? One answer proffered by well-meaning politicians is to let councils and housing associations buy up the spare stock. They should be able to borrow to both add to the number of affordable houses and also to help prop up the house builders.
Firstly do you really want the tax payer paying more money into a pit like the £25bn they bailed out Northern Rock and the £50Bn they gave to banks earlier in the year. And for what? Why fake demand and keep house prices artificially high by distorting the market in such a way? I think prices are going to continue to fall and I can’t find anyone who thinks that now is the best time to buy. Most people think that property will be cheaper tomorrow.
Secondly, if you have already bought in a nice close or on a bijou estate do you really want the equivalent of council tenants living next door? Now I think that they should get help and be housed somewhere but I can draw you a diagram of what will happen to the value of the next door houses bought a few months ago and the arrow goes down!
Now is not the time for a bold social experiment unless the Government wants to buy Barrett and build social housing for the masses. As with power stations, prisons and immigration centres. Everyone wants them – just not in my back yard!