Big housebuilders are making big profits

Author: Dawn Southgate

Britain’s housebuilders are thriving. Persimmon, the largest, has reported its highest-ever profits of £1.1 billion. One factor is that housebuilders are better managed than before the financial downturn; they have also benefited from the Government’s “Help to buy” scheme, but a paper from the London Business School suggests that the initiative has caused prices to rise by as much as 5%! The market is also changing: once small builders were responsible for nearly half of Britain’s homes; now their share has fallen to a tenth, leaving big builders with the lion’s share. This is in part due to the complex nature of planning: small firms haven’t the resources or time to go through the appeal process. The market needs new entrants and the Government will need to lower barriers to entry for smaller builders…

The Economist, 9 March 2019, pp24-25

[First published in Cutting Edge, 13 March 2019]