Comments on: Hadn’t thought of it this way http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/ It is all obvious or trivial except... Sun, 12 Feb 2012 10:09:58 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: rosscoe http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/comment-page-1/#comment-14183 rosscoe Mon, 23 Jun 2008 11:22:45 +0000 http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/#comment-14183 As I've posted on Raedwald, It doesn't work like that- the flats are worth what they're worth as a builder you have very little control over the price that you set for your product- that is done by the market. The social flats are priced in at the start of the project and the land value is adjusted accordingly. It's the orginal landowner who bears the cost not the new residents. As I’ve posted on Raedwald, It doesn’t work like that- the flats are worth what they’re worth as a builder you have very little control over the price that you set for your product- that is done by the market.

The social flats are priced in at the start of the project and the land value is adjusted accordingly. It’s the orginal landowner who bears the cost not the new residents.

]]> By: Banditry » Blog Archive » Another house price post http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/comment-page-1/#comment-14181 Banditry » Blog Archive » Another house price post Mon, 23 Jun 2008 10:42:02 +0000 http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/#comment-14181 [...] Via Tim, Raedwald has a silly piece suggesting that the 30% collapse in new-build flat prices, rather than being the outcome of a speculation bubble, came because developers were required to build 30% social housing as part of the development. [...] [...] Via Tim, Raedwald has a silly piece suggesting that the 30% collapse in new-build flat prices, rather than being the outcome of a speculation bubble, came because developers were required to build 30% social housing as part of the development. [...]

]]> By: john b http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/comment-page-1/#comment-14180 john b Mon, 23 Jun 2008 10:35:49 +0000 http://timworstall.com/2008/06/23/hadnt-thought-of-it-this-way/#comment-14180 Err, you know economics? Raedwald doesn't. If the new-build flats sold for 30% more than existing Victorian and Edwardian properties nearby, that's because buyers believed they were worth 30% more than existing Victorian and Edwardian properties nearby - otherwise, prices would have converged. In fact, the most likely reason the new build flats listed for 30% more than existing properties is that builders across the board granted a discount of just over 30% for buying off-plan. Which also means that any fall in real new-build flat prices should be taken from 30% below list, not from list. How were the 'affordable' flats funded, then? Well, the marginal cost of *building* them compared to building the same development without HA flats, which is low, is covered by the money paid by the HA to the builder. What about the difference between building cost and the theoretical value of an HA flat? Well, that's borne by other local residents, assuming that the purpose of the planning laws is to protect local residents from overpopulation (because in the space where the developer would otherwise have been given permission to build 20 full-price flats, he's received permission to build 20 full-price flats and 8 affordable ones) Err, you know economics? Raedwald doesn’t.

If the new-build flats sold for 30% more than existing Victorian and Edwardian properties nearby, that’s because buyers believed they were worth 30% more than existing Victorian and Edwardian properties nearby – otherwise, prices would have converged.

In fact, the most likely reason the new build flats listed for 30% more than existing properties is that builders across the board granted a discount of just over 30% for buying off-plan. Which also means that any fall in real new-build flat prices should be taken from 30% below list, not from list.

How were the ‘affordable’ flats funded, then? Well, the marginal cost of *building* them compared to building the same development without HA flats, which is low, is covered by the money paid by the HA to the builder.

What about the difference between building cost and the theoretical value of an HA flat? Well, that’s borne by other local residents, assuming that the purpose of the planning laws is to protect local residents from overpopulation (because in the space where the developer would otherwise have been given permission to build 20 full-price flats, he’s received permission to build 20 full-price flats and 8 affordable ones)

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