A new report has revealed the scale of soaring profits at the UK’s biggest housing developers.
The research, carried out by Sheffield Hallam’s Centre for Regional and Economic Social Research (CRESR), analysed the financial records of the nine biggest house-builders between 2010-2015 and found results described as startling.
The nine biggest housing developers, who build nearly half of all new housing, increased their housing output by 33% from 2012-15.
At the same time, revenue grew at more than twice this rate, increasing to 76%, with profit before tax rising by a staggering 200% in this period.
The research also showed that end of year profits for the biggest five firms (after taxation, impairments and exceptional items are taken into account) increased from £372m in 2010 to over £2bn by 2015 – an increase of over 480%.
Furthermore, dividend payments to shareholders in 2015 by these firms amounted to 43% of yearly profits, raising questions about the levels of reinvestment in housing production taking place.
As well as providing a thorough financial analysis of the performance of major house-building firms, the report – Profits before Volume? Major house-builders and the crisis of housing supply – provides a number of recommendations as to how the sector and Government can improve housing supply.
Suggested measures include moving the balance of housing subsidy away from demand and towards supply.
New homes builders haver been ripping off the public for years. They got into the mentality of the new car syndrome. Who hasn’t later on a resale valuation had to bring the vendor (or try to!) back down to earth with the other resale stock at least 10% cheaper? Builders tapped into the unsustainable mortgage lending (6 x income) and I would go so far as to say it was the New Builds that started the 2006 boom off. Subby bashing and materials costs have not kept pace with new charges for housing by builders = big profits. I doubt many agents will be surprised by this report as it was obvious to see and it is encouraged by government!
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