The recovery in house building reached a symbolic point yesterday with the first land value write-back by a major firm but major questions remain about the implications for affordable housing.
House builders have been busily writing down the value of their land ever since the downturn started but Persimmon revalued its assets by £74.8m and reported a £77.8m profit for 2009. This compares with a loss of £780m in 2008.
Rivals Taylor Wimpey and Barratt also saw improvements in their performance but still reported losses of £640.6m and £178.4m respectively. Taylor Wimpey called it a year of two halves, with selling prices continuing to fall in the first six months before rising again in the second half.
Unsurprisingly, completions were down at all three companies as they concentrated on controlling their spending and increasing their margins. Their combined total fell 20% to 24,000 although the prospect of starting work on more sites suggests that will improve this year.
Dig a little deeper though and you discover that completions of affordable homes fell by more. Total affordable completions at the three firms fell 34% from 6,048 to 3,978.
Much of the reduction is to do with changing the product mix away from flats and towards more profitable two-storey houses and the replanning of new sites. A clue as to the effect of replanning comes in Taylor Wimpey’s statement, which describes it as ‘an ongoing process, with successes in changing the product mix on sites within the landbank to be more appropriate to the current market conditions and reducing planning obligations to make sites viable at lower average selling prices [my itals].’
That is set to continue in future too. The statement goes on: ‘We have identified around 60% of the plots with detailed planning in our landbank as being suitable for replanning, with around one-third of those plots having already been replanned successfully.’
All of which is a perfectly logical part of the housebuilders’ road to recovery – but it shows yet again that what is good for housebuilders is not necessarily good for housebuilding or housing.
Have your say
You must sign in to make a comment