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A few home truths.
Housebuilder selling prices, profit margins, and dividends continue to soar whilst housebuilding itself only edges upwards.
Persimmon has revealed that it built only 8% more homes in the six months to June. However, revenue went up by 12% and average selling prices increased by 3.5%.
It is on course to exceed an operating margin on 25.7% (!!!) with shareholders set to get almost £3billion over the next five years.
However, Shelter research shows that only 68% of houses which had been given planning permission in England over the past five years have actually been built. That amounts to 324,000 'phantom' homes.
Aside from any planning delays, often more important is how the land market works: trading in development sites is arguably more important to housebuilders than building homes on them. Over the past 60 years agricultural land has doubled in value in real terms but the value of land with planning permission has risen 1,200%. Rising house prices drive up land prices; housebuilders then argue for a reduction in the amount of affordable housing they have to provide in order to make a development viable, and that drives up prices even more.
The system is broken but no one has the guts to fix it. Just look at how long it takes builders to actually start work on permitted sites around here. They ignore sites with planning permission, then apply for speculative permission on 'none allocated' sites, and then have the nerve to argue that WC has not provided sufficient housing and therefore does not have a five year land supply thus meaning that they (the developers) should be allowed to build anywhere they like. Talk about a dog's breakfast of a system...
The Tory manifesto had ideas to tackle this. Have they disappeared along with May's majority?
How about charging speculative developers/housebuilders council tax on the permitted properties from the day that planning permission is granted? That would surely get them to focus their attentions on getting the houses built!
* Sections of this web-post have been taken from the current edition of Private Eye. Price £1.80 at all good newsagents!