The ‘cheering news’ from the multiple builder sector this week is a classic case of crony capitalism in favour of Party supporters.
Bovis Homes has continued the recent run of ‘positive news’ from UK housebuilders this morning, announcing that profits will be ahead of market expectations. Both Barratts and Taylor Wimpey also said in separate statements this week that they expect to report ‘significant increases in full-year profits’. What’s more, Bovis affirms that, as of January 1 2013, it held forward sales for 2013 delivery of 778 homes – a whopping 37% up compared to 568 homes at the start of 2012.
For most people in the UK, the question on reading this will be along the lines of WTF is going on here? Margins are increasing, so they’re clearly not discounting are they?
A bit of it is being driven by the Bank of England’s Funding For Lending scheme pushing cheap money through banks and building societies to borrowers. But the real amounts here are relatively piddling: austerity measures and the eurozone crisis have been far more influential in the opposite direction.
The answer is that the multiple builder sector is doing it by cutting costs, and building in more upmarket and demanded places.
They cut costs by buying land when it was in recession. They’re cutting costs by screwing employees on wages. And they ensured more planning permissions by, as a sector, giving a £3.5m donation to the Conservative Party during the 2010 election. Eighteen months after that, Dodgey Dave the fixer relaxed planning applications. Well I never. It’s that leg up again.
Chief Executive David Ritchie says in a statement today, “Our continued strategy for growth through investment in high quality consented and strategic land” paid dividends, as did “buying land cheaply during the recession, and building in south England where house prices have stayed strong.”
And hob-nobbing with the PM. Kerr-ching, Ithangyoo.
Meanwhile, during last October the Daily Telegraph reported that ‘Southerners are typically putting their homes on the market for £336,743, compared with £164,347 in the northern regions…..the £170,000 chasm is the largest in monetary terms since Rightmove’s house pricerecords began in 2002.’ House prices rose four times quicker in the South during 2012 than they did in the North.
This view was confirmed by thisismoney during December, when it recorded that ‘the imbalance in Britain’s property market was laid bare by official figures showing house prices were up 1.5% in the year – but more than half of the rise was delivered by London and the South East.’
So then, a nation of two halves, and overcrowding in the south east, made worse by the triumph of political greed over national need.
And the use of an effective subsidy for a struggling industry by a Government polemically dedicated to free markets and dying white elephants.
And the exacerbation of an overpopulation problem barely tackled by a Government that pledged in April 2010 to slash immigration immediately.
And another nail in the coffin of the countryside.
And a policy favouring Conservative voters in the South at the expense of Labour voters in the North. Because it’s a level playing field, and we’re all in this together.
That’s the way old Blighty folds, pop goes the Weasel.