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THE writing is on the wall for housing numbers because of limited capacity of house-builders.
Small and medium-sized companies have disappeared in large quantities, and the few large companies left have reduced capacity and reduced balance sheets.
The biggest by market capitalisation, Persimmon, has agreed to pay shareholders £1.9billion in dividends over the next nine years.
The company is making pre-tax profits of £200m, so in real terms, if its margins stay at that level, it will not grow in terms of capacity based on its balance sheet. If its margins shrink, so will Persimmons’ capacity, unless finance costs (interest rates for borrowing) reduce significantly, which isn’t likely.
The only chance of being able to increase volumes is subject to a combination of higher margins and lower borrowing costs.
What does this mean for councils desperate for new housing? Councils which want to attract house-builders will only do so with attractive (lower) affordable housing targets.
Those which do not lower their targets will not get the housing they need.
There is only one way to increase housing in York – through a stimulus by dropping the affordable requirements.
Paul S Cordock, Durlston Drive, Strensall, York.
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