Big house builders, Less houses, more profit

You know the argument so I won’t dwell on it. But we need more homes and yet we’re building less. I have argued before that the real problem is affordability not supply, but the government certainly does accept the need to build more. It has been keen to help by creating guarantees and grants and relief from regulation to make it easier for more homes to be built. Its recent initiatives to help house builders include:

• £20 billion housing guarantee plan
• £225 million to support large-scale housing sites
• New buy scheme providing subsidy to allow 95% mortgages on new build homes
• A holiday for house builders from their obligations to build social housing as part of large housing developments
• Requirement for all new homes to be zero carbon by 2016 watered down.

So is there any sign that this vast amount of public support for the house building industry is working? Nope. The latest government statistics show that house building is actually in further decline, with housing completions down 6% and housing starts down 10%.  The industry is unapologetic and is asking for yet more help inviting the chancellor to "refine and expand" the measures he's already introduced.
So how have the big builders faired during this (apparently) most  difficult of periods? Here is the latest profit news from the UK’s ten biggest house builders:

1. Barretts profits up 159% to £111m 
2. Taylor Wimpey profits up 135% to £78.2m
3. Persimmon profits up 65% to £98m
4. Berkley profits up 40% to £142m
5. Bellway profits up 57% to £103m
6. Redrow profits up £17m to £30M
7. Galliford Try profits up 80% to £63m
8. Bovis profits up 100% to £16m 
9. Crest Nicholson profits up £34m to £12m
10. Bloor profits up £18m to £40m

I suspect that most people would be surprised to hear this, but far from having a difficult time, many of these companies are making record profits. How? simply by building fewer homes for higher prices. In their results both Persimmon and Bellway even boast that their average house sale price is the highest it's ever been. It appears suspiciously like the large house builders have happily accepted government support and used  it to shore up their own profits by building a small amount of expensive houses for the small number of people who can actually afford their prices. If I'm right and affordability is the real problem, this hardly feels like the answer.


N.b. the profits data given here is the latest from each company and is a mixture of full and half year reports. Bloor only publish operating profit information for the holding company Bloor holdings.