I've been a big fan of yours and your work for many years, Dominic, but this article is incorrect and misleading. Where we live in Scotland it costs much more to build a house than to buy one, and this is with cheap land prices. Building costs are £2500 per M3 exc land, foundations and landscaping. Like you say, you can buy a timber frame house kit for £100k or so, but then you need to add plaster, kitchens, bathrooms, flooring, labour etc .
If you could really build a house for £54k then every sensible being in Aberdeenshire would buy a plot for £100k and have a lovely four bed house for £154k, far less than the £400k four bed market price. In reality, you're looking at £500k+ for a 200m3 completed superstructure, £30k for foundations, some extra for driveways, septic tanks, drainage etc, and £100k for the land, so more like £650k Vs a market price of £400k.
Thanks Joseph. I take your point. I would say though a lot of the £2,500/M3 is cost of government, regulation, permitting etc and could be reduced by the imaginative self-builder who is prepared to cut corners.
Excellent Article Dominic , I actually originally heard about you based on some of your videos and writings on land value tax, so good to see you still have interest in the issue!
Indeed. A lot of it is driven by people chasing yield in an ultra low rate environment. Back when savings accounts paid 4%, in order to be incentivized to invest in property and all the hassle, risk, and costs entailed, one would want a gross yield of say 7-8%. But now savings accounts pay close to 0%, people will settle for a property rental yields a low as 2% in some areas, which means the purchase price can increase 400%.
Don’t get lured into some of these, short term interest rates are eye watering. No wonder the banks are doing so well.
"Representative Example: Rates from 43.1% APR to 1333% APR. Minimum Loan Length is 1 month. Maximum Loan Length is 36 months. Representative Example: £1,200 borrowed for up to 75 days. Total amount repayable is: £1506. Interest charged is 0.34% per day, amounting to £306, annual interest rate of 124% (variable). Representative APR: 49.7% (variable)."
In the near future a lot of people are going to be crippled by these rates.
I've been a big fan of yours and your work for many years, Dominic, but this article is incorrect and misleading. Where we live in Scotland it costs much more to build a house than to buy one, and this is with cheap land prices. Building costs are £2500 per M3 exc land, foundations and landscaping. Like you say, you can buy a timber frame house kit for £100k or so, but then you need to add plaster, kitchens, bathrooms, flooring, labour etc .
If you could really build a house for £54k then every sensible being in Aberdeenshire would buy a plot for £100k and have a lovely four bed house for £154k, far less than the £400k four bed market price. In reality, you're looking at £500k+ for a 200m3 completed superstructure, £30k for foundations, some extra for driveways, septic tanks, drainage etc, and £100k for the land, so more like £650k Vs a market price of £400k.
Thanks Joseph. I take your point. I would say though a lot of the £2,500/M3 is cost of government, regulation, permitting etc and could be reduced by the imaginative self-builder who is prepared to cut corners.
Amazing how many parallels there are between the UK’s housing market and that in the US - especially the Northeast and West Coast.
Here here.....keep up the great work.
Excellent Article Dominic , I actually originally heard about you based on some of your videos and writings on land value tax, so good to see you still have interest in the issue!
Indeed. A lot of it is driven by people chasing yield in an ultra low rate environment. Back when savings accounts paid 4%, in order to be incentivized to invest in property and all the hassle, risk, and costs entailed, one would want a gross yield of say 7-8%. But now savings accounts pay close to 0%, people will settle for a property rental yields a low as 2% in some areas, which means the purchase price can increase 400%.
Cheap money?
Don’t get lured into some of these, short term interest rates are eye watering. No wonder the banks are doing so well.
"Representative Example: Rates from 43.1% APR to 1333% APR. Minimum Loan Length is 1 month. Maximum Loan Length is 36 months. Representative Example: £1,200 borrowed for up to 75 days. Total amount repayable is: £1506. Interest charged is 0.34% per day, amounting to £306, annual interest rate of 124% (variable). Representative APR: 49.7% (variable)."
In the near future a lot of people are going to be crippled by these rates.