Mr. Jon Watson MA DipArch DipTRP MRTPI

GLG News^SM Analyses by Jon Watson

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Recovery in UK housing production could trigger further land bank write downs

August 6, 2009

Analysis of:Taylor Wimpey takes further £527m writedowns | www.ft.com

Taylor Wimpey's results (5 August) show a further write down of £527m on their land bank and work in progress. The following day, Bellway launched a £45m rights issue to finance further land purchases (http://www.building.co.uk/story.asp?storycode=3146488&origin=bldgdailynewsletter). These different responses to the problem of writing down the value of sites purchased at the height of the housing land bubble in 2006/7 could have significant consequences as the market recovers.

SAFETY FIRST, BUT A RATHER HASTY DECISION?

October 10, 2008

Analysis of:Kier to focus on social housing | www.ft.com

Kier is one of the major housing contractors in the UK and a significant “second division” house builder.  They have decided to exit house building and concentrate solely on building for housing associations (the main providers of affordable/social housing in the UK).    In the short term, this is undoubtedly an appropriate tactic.  However, I am not sure that it makes sense as a longer term strategy.  The latest NHBC statistics show that house building starts in the June – August quarter 2008 are down 65%, whereas social housing starts are up 8%.   However, house building opportunities in the UK are dependent on land supply, which is very restricted due to the planning system.  In the short term, there will be a ready supply of “fire sale” sites, but when the market recovers, shortages are likely to become very apparent very quickly. 

Pretty painful, but not terminal

June 16, 2008

Analysis of:U.K. Homebuilders May Avoid `Armageddon,' UBS Says | www.bloomberg.com

Whilst there is no doubt that there will be significant write downs on some sites in most house-builders’ land banks, the nature of the land deals for many of the sites in those land banks means that much of the pain will be felt by the original vendors of the sites rather than the house-builders themselves.

UK House Prices: Is this the turning point? Probably, but not in the way that most commentators suggest!

March 28, 2008

Analysis of:Where are the first time buyers? Day of reckoning for the housing market | www.guardian.co.uk

First time buyer activity is the traditional prop for the market:  despite continued high levels of household formation (225k per annum, compared with build rates of 160-180k per annum), increasing numbers of newly forming households are choosing to rent rather than buy. In parallel, buy to let activity, the boom industry over the last five years, has evaporated as a result of the credit crunch. Where are the buyers to allow people to trade up from entry level properties?

Unintended consequences?

March 3, 2008

Analysis of:Opening bids: how the badly drafted Housing Bill could choke the supply of affordable new homes | property.timesonline.co.uk

Reduced levels of house building Reduced provision of affordable housing Increased public borrowings Loss of innovation and growth in new housing products.

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