Building the Dream s6e4 - Are they exaggerating the profits?

[daiking]

5 minutes ago, AliG said:

This is a whole new debate.

 

The average new car in the UK costs £29,000, the average house in the UK costs £220,000 which is massively inflated by London. So the average new car costs more than 10% of the cost of the average house.

 

However, for people who live in detached houses like self builders the average car/house value is probably more like 6-7%. As houses get more expensive the relative value of cars tends to fall.

 

And for some of you tightwads who like driving around in antiquated cars the figure is considerably less 

 

In all seriousness I know that driving an old car massively reduces depreciation costs, but newer cars are generally much nicer and safer to drive and sadly there is an intangible feelgood factor that I am happy to pay up for. What I try to do is to drive an expensive car with low depreciation, but basically they're my weakness!

 

BTW I read an article a couple of years ago about people being more and more willing to spend £100k on kitchens. It's crazy. They are usually a little bit nicer but I feel a lot of it just goes into profit margins, commissions etc. So you're right Jack £50k isn't that much at some places, I would still argue it's way more than necessary and certainly one of the first things to go if you can't afford to build the house you would like.

 

Do you have a sources for that average new car price? That is astonishing.

[jamiehamy]

18 minutes ago, AliG said:

And for some of you tightwads who like driving around in antiquated cars the figure is considerably less 

 

[swisscheese]

It's not the price of keeping the 'Y' plate Mazda on the road that blowing the budget, it's the cost of getting services on site that's killing me, but that is another story.

[jack]

33 minutes ago, AliG said:

So you're right Jack £50k isn't that much at some places, I would still argue it's way more than necessary and certainly one of the first things to go if you can't afford to build the house you would like.

 

Oh yes, no argument about that.

 

33 minutes ago, AliG said:

And for some of you tightwads who like driving around in antiquated cars the figure is considerably less if you can't afford to build the house you would like.

 

My main car is worth well under one percent of the value of my house.  I knew I was a tightwad but this is ridiculous!  

 

The interesting thing is that I'm a real car guy.  I just don't see the value in spending a lot of money on them!

[Ferdinand]

42 minutes ago, AliG said:

This is a whole new debate.

 

The average new car in the UK costs £29,000, the average house in the UK costs £220,000 which is massively inflated by London. So the average new car costs more than 10% of the cost of the average house.

 

In all seriousness I know that driving an old car massively reduces depreciation costs, but newer cars are generally much nicer and safer to drive and sadly there is an intangible feelgood factor that I am happy to pay up for. What I try to do is to drive an expensive car with low depreciation, but basically they're my weakness!

 

BTW I read an article a couple of years ago about people being more and more willing to spend £100k on kitchens. It's crazy. They are usually a little bit nicer but I feel a lot of it just goes into profit margins, commissions etc. So you're right Jack £50k isn't that much at some places, I would still argue it's way more than necessary and certainly one of the first things to go if you can't afford to build the house you would like.

 

The trick surely with £100k kitchens is to buy it for £20k then sell it to someone else for the £100k?

 

I am still looking for my 2012-2014 Audi A4 Allroad 3.0l diesel for around £15k, but I am not convinced that the kneejerks running some of our cities are capable of distinguishing between an evil 2005 diesel that pollutes badly and an acceptable 2016 diesel that does not do so. So I am also looking at the later version, which may be even more painfully expensive.

 

My current car just about passes the 1% test.

 

All that means is that our houses are obviously too expensive.

 

Ferdinand

 

Edited February 2, 2017 by Ferdinand

[SteamyTea]

Average prices of 'stuff'.

There are at least six ways of working this out.

You need to take the mean, median and mode prices and then compare those to the volume of sales.

 

So taking two cars, a Fiesta at 12,000 and a Bugatti at 1,500,000, gives you a mean price of 756,000

Now take 3 cars, a Fiesta at 12,000, a Bugatti at 1,500,000 and a Scenic at 22,000, mean price is now, 511,333, but the median value is 22,000

Now 5 cars, Fiesta at 12,000, a Bugatti at 1,500,000, a Scenic at 22,000 and a BMW 3 at 22,000 and an Auris at 22,000

Mean price is 38,9200, median is 22,000, and there is now a mode price of 22,000

 

This would change drastically depending on car sales.

Say that 50% were Fiestas, 30%, BMW 3, 19% Scenics and 1% Bugatti and 100 cars were sold, then the prices are:

Mean price is now 31,700.

 

 

So when talking about an average price, especially when correlating it to another price, think carefully about what you actually mean.

Edited February 2, 2017 by SteamyTea
edited for clarity

[AliG]

The average car price I quoted was from a company called Driven Data, however, this is the average "showroom price". The SMMT suggested an average transaction price of £22,000 a year ago, probably £23,000ish last year.

 

I am assuming this is the mean average, it would be pretty unusual to quote the median or modal average.

 

Arguably the average house price  average has the same issue. I looked up West Sussex earlier and saw a nice place at £19.5m

 

That's what happens when you quote data in a hurry as you should really be working!

 

 

 

 

Edited February 2, 2017 by AliG

[Jeremy Harris]

Funny thing about a kitchen costing about 60% of your car.  My car cost me £21k, the kitchen cost just under £14k (including all the appliances)............................

[Barney12]

We had a quote from a local kitchen co recently who supply Hacker: https://www.haecker-kuechen.de/en/kitchens.html

It was £37k for the "The price-conscious kitchen concept" the area in question was 24sq m. One wall of 7 full height cupboards and one 2m sq island.

I didn't go back and ask for the cost of the premium version

 

 

[daiking]

1 hour ago, Barney12 said:

We had a quote from a local kitchen co recently who supply Hacker: https://www.haecker-kuechen.de/en/kitchens.html

It was £37k for the "The price-conscious kitchen concept" the area in question was 24sq m. One wall of 7 full height cupboards and one 2m sq island.

I didn't go back and ask for the cost of the premium version

 

 

 

 

 

Even as someone who spent too great a proportion of the budget of an extension build on the kitchen that is a lot of money. I could get a bespoke one with high end appliances for that kind of money. 

 

The money spent on my kitchen should have been spent in the general construction but it wasn't. Thems the breaks.

[AliG]

I clicked that link Barney, it doesn't look anything special and that price is outrageous.

 

I have been getting quotes recently for the laundry room in the house where we are going to have full height cabinets.

 

Frankly I hated paying up £4-500 per cabinet including fitting for just the cabinetry. Then there are appliances, worktops etc over and above this, but I don't have the time to do it myself and they will probably do a nicer job than me. In the current house I bought the cabinets from Homebase and built and fitted them myself. If you do this you are probably talking £100-200 per cabinet. Lots of drawers do push the prices a bit higher than these figures.

 

The new place will have a Callerton Kitchen, as I have in my current house. It was quite nice to buy something made in the UK. The cabinetry where I have a lot of 1000mm wide deep drawers is coming in at around 700-800 a cabinet. That's in a combination of high gloss and real walnut.

 

I balk at that price yet it seems some of these places are charging £2000 a cabinet or more. Often the only difference is how nice the door is and the basic cabinets are very similar.

 

 

 

 

 

 

Edited February 2, 2017 by AliG

[Ferdinand]

18 minutes ago, daiking said:

 

 

 

Even as someone who spent too great a proportion of the budget of an extension build on the kitchen that is a lot of money. I could get a bespoke one with high end appliances for that kind of money. 

 

The money spent on my kitchen should have been spent in the general construction but it wasn't. Thems the breaks.

 

I make £37k per 24sqm more than the unit area cost of a normal house, including the kitchen.

 

Surely for that you can get bespoke from a local Chippy?

Edited February 2, 2017 by Ferdinand

[DH202020]

13 hours ago, AliG said:

I just watched this week's Building the Dream

 

The house was very nice and for some bizarre reason the owners sold the plot without planning permission even though achieving planning does not seem to have been contentious. I found the original planning application and there was not one comment. Indeed the original proposed house was somewhat larger as it was 2.5 storeys high although the final design was probably nicer.

 

However, they claimed to have spent £480,000 and had the house valued at £1m. On most episodes I know nothing about the area, but as a kid my parents looked at houses in Dalgety Bay in Fife. That valuation for a 220sq metre house is almost double the prevailing valuation in the street and as far as I can find the most a house has ever sold for in Dalegty Bay is £620,000. Currently a somewhat larger house with a pool, although maybe not as nice is for sale at offers over £795,000. This is in probably the most expensive street in Dalgety Bay, Donibristle Gardens.

 

Anyway, I would guess the house is worth nearer £700-800,000, still a fantastic profit, but it made me wonder if they are consistently over estimating values. As people on here often note if you self build nowadays often you just break even. The people last night will have been helped by buying the land below market.

Like you I watched with great interest, especially the snip of a price for land!

As this was similar to ours (except the size)..ie purchased land with no planing consent, hands on selfbuild with 'homes under the hammer' filming before we started and finally at the end!

 

I recently finished our 3bed detached for around £200k not Inc Land (cost 90k).

They then get the local estate agents to have a nose round, giving their expertise as too price and finish.

It turns out it wasn't what they were expecting (normal run of the mill in design and finishing) hence they struggled to price it in the general market place.

 

Can't wait to see what they said on camera?... in other words it was all guess work!!

I guess as selfbuilders we just 'don't do normal'

[AliG]

As you say it is often harder to value self builds due to better build quality and finishing. In reality people don't pay much  for these so I would tend to just go to the high end of local prices per square foot, or slightly above. The trouble especially with interior finish is it depreciates pretty quickly. I see houses for sale today that I thought were stunning 15 years ago and now they look tired and old fashioned.

 

Last night's valuation was way out from prevailing local prices. It was undoubtedly a nicer house, but even my suggested £7-800,000 is well above the local norm trying to allow for the nice, finish, views etc.

 

My architect took me to see a house he designed before we started. The people planned to sell it and build next door. When they put it up for sale, I reckoned it was at leat 15% overvalued when I compared to local values. Again it was way higher per square foot than houses being built nearby by Cala homes an upmarket but mass market developer. They have now cut the price by £50k and it still hasn't sold. I saw another recent small development where the houses were at least £100k over the prevailing market price. Some developers just seem to chance their arm. I try not to say anything. There is a development in Edinburgh called Caer-Amon. When the developer started it the houses were around 40% more per square foot than the new house I had bought a couple of years earlier, it was 2006. It is also under the flight path to Edinburgh airport and the houses are ugly, but nicely built and finished. When asked by the salesperson I told them that they were way overpriced. She told me that some people had bought in the first phase with the intention of selling up and moving to the last phase subsequently. They still haven't sold all the houses in the development and the houses sold in 2006/7 are sometimes worth less than people paid for them.

 

I guess the point is it is hard to buck the prevailing market price for a house.

 

I looked up the value of these houses on Zoopla and noticed that it is valuing houses way over the price that actual neighbouring houses are up for sale for (and still not selling). My own houses they have added £100k to in the last 6 months. I hadn't noticed this and it is theoretically nice, but I am pretty certain I would really struggle to get the price they were quoting 6 months ago. I have never seen its estimates so far out before, I think what is happening is that they are indexing all houses in Edinburgh to the rise in the market, but as often discussed before large houses are currently very difficult to sell in Scotland and considerably underperforming the overall market.

Edited February 2, 2017 by AliG

[Ferdinand]

i wonder how many year it takes before  a 100k kitchen has lost half its value?

 

Is there an "into service" penalty like a new car?

[daiking]

It never ceases to amaze me how the self builders here struggle to justify the money they are spending relative to the value they will create at the end of the process on houses that are better than 99.99% of existing stock.

 

The irony is that I bought a shit house, added a crap extension and added value and could walk away tomorrow with a profit.

 

 

it signifies what is wrong with the U.K. Itself, not just the housing market 

[Steptoe]

What I think a lot of self builders fail to grasp is the sheer price that mass builders can buy materials for,

Mass builders could, if they wanted, build a house to most of the self build standards for a large % less than a self builder,

Its about quantities of buying power,

Example, I do a lot of contract work for a largeish company, they can buy normal T&E cable about 30% less than I can, simply because they buy in the 1000s of metres every month, and I maybe only hit 500m if I'm lucky, and that's for a specific size, on the other hand, I can buy pyro (a fairly specialised cable), about 10% cheaper than they can as I buy it more regularly than they do . I can actually ring the wholesaler up (same one they use) and have it next day in any size I need, they are on a 5 day turnaround on it.

Its all about buying power, that's why Tesco (other supermarkets are available) can sell the same loaf of bread much cheaper than your local corner shop.

 

Yes, lots of stuff can be bought cheaper online too, but at what cost in time, I usually can't justify hours trawling online to save a fiver on a light fitting, or some other item if I'm only fitting 10 of them,

Time is money, if my customer wants to do that, I'm fine with it, I just don't warranty it,  even if a customer sends me a link i wont supply it, too many CCCs out there, as shown by @JSHarris with his unearthed lights, you wouldn't save much money by getting me to test and strip every light.

Its not unknown either for cheap cable etc either to be sold, CCS was very common a couple of years ago for T&E.

 

 

 

[Bitpipe]

15 hours ago, Barney12 said:

We had a quote from a local kitchen co recently who supply Hacker: https://www.haecker-kuechen.de/en/kitchens.html

It was £37k for the "The price-conscious kitchen concept" the area in question was 24sq m. One wall of 7 full height cupboards and one 2m sq island.

I didn't go back and ask for the cost of the premium version

 

 

 

We chose a Haecker kitchen with stone worktops, wrap around glass splashback, full height fridge, full height freezer and four Neff ovens (don't ask) plus Siemens induction hob and extractor and a Quooker tap for much less than that. The firm we used are primarily stone / glass suppliers but do a sideline in Hacker kitchens.

[AliG]

Shows that often it's just mark up. Like I said on the kitchen I just counted up how many cupboards there were, allowing for drawers, more expensive cabinets for ovens etc and then said how do you get to xx price per cabinet. Get them to break the price down into cabinets, worktops, equipment etc. Because  you can buy appliances on line it is very easy to check the prices and you can again look at the price of the worktops per square metre to check that. Usually the markup is in the cabinetry. I stripped the equipment out of my main kitchen order as I could buy it all a couple of thousand cheaper on line. I was surprised that they didn't try to raise the price of the cabinets as I had stripped so much of their profit out of the order, nor would they match the online prices which was odd as I am sure they buy below these prices. Almost all kitchens have similar MDF cabinets. There is just no justification to try and sell something unless it is very special for over £1000 a cabinet.

 

I suspect I could have saved quite a bit over the whole build compared to the main contractor who just orders stuff up from the builders merchant. Often what works is to figure out what the reasonable price to pay is and then stick to saying that is the price you want to pay. If you are not silly about it often you will get that price or very close.

[daiking]

7 hours ago, Steptoe said:

What I think a lot of self builders fail to grasp is the sheer price that mass builders can buy materials for,

Mass builders could, if they wanted, build a house to most of the self build standards for a large % less than a self builder,

Its about quantities of buying power,

Example, I do a lot of contract work for a largeish company, they can buy normal T&E cable about 30% less than I can, simply because they buy in the 1000s of metres every month, and I maybe only hit 500m if I'm lucky, and that's for a specific size, on the other hand, I can buy pyro (a fairly specialised cable), about 10% cheaper than they can as I buy it more regularly than they do . I can actually ring the wholesaler up (same one they use) and have it next day in any size I need, they are on a 5 day turnaround on it.

Its all about buying power, that's why Tesco (other supermarkets are available) can sell the same loaf of bread much cheaper than your local corner shop.

 

Yes, lots of stuff can be bought cheaper online too, but at what cost in time, I usually can't justify hours trawling online to save a fiver on a light fitting, or some other item if I'm only fitting 10 of them,

Time is money, if my customer wants to do that, I'm fine with it, I just don't warranty it,  even if a customer sends me a link i wont supply it, too many CCCs out there, as shown by @JSHarris with his unearthed lights, you wouldn't save much money by getting me to test and strip every light.

Its not unknown either for cheap cable etc either to be sold, CCS was very common a couple of years ago for T&E.

 

 

 

 

This is a question that self builders should be able to answer off the top of theirs heads, what percentage of the the total build cost is materials? 25%?

[Jeremy Harris]

The mark up on some stuff is surprisingly high, and not always on the expensive stuff, either.  I bought some blocks, pavers and stone for around 2/3rds the best price our very good local BM could supply them for, and this was the same BM who really tried to price-match online stuff, and was generally between 25% and 50% cheaper than the "big name" BMs.  With the pavers for the drive, I remember the conversation.  I'd found a source online, they were a Marshalls product, so should have been available at every BM in the land, and I range our local BM and asked if he could get me a price.  He rang back, apologised, and said that the price I was paying was less than they could buy them for, so would I mind letting him know the name of our supplier!

[jamiehamy]

1 minute ago, daiking said:

 

This is a question that self builders should be able to answer off the top of theirs heads, what percentage of the the total build cost is materials? 25%?

Other half is tracking this, but we've not updated for a while. For us,  I reckon about 70% with us doing most of the work. I'm try to keep hot on pricing as that is the main way to control costs for us. 

 

 

[daiking]

1 minute ago, jamiehamy said:

Other half is tracking this, but we've not updated for a while. For us,  I reckon about 70% with us doing most of the work. I'm try to keep hot on pricing as that is the main way to control costs for us. 

 

 

Sorry, I was thinking more of a hands off approach and the value of materials compared to land, services and trades.

Edited February 3, 2017 by daiking

[AliG]

Back on the Building the Dream house, how could the electrics have possibly cost £35,000.

 

Again its the kind of thing where I would tot up the numbers of sockets, switches and light fittings and then work out the cost per item. Surely that size of house didn't have enough electrics to get anywhere near that cost. I think @prodave is our resident electrician, is this a good rule of thumb? I would go on £50-100 per fitting plus maybe an allowance for the consumer unit, etc?

[ProDave]

Don't forget Steptoe and OnOff are also electricians.

 

I haven't watched this one yet (I never watch commercial tv live) so haven't yet seen the house.

 

For a normal new build I have never yet exceeded 1 hour labour per point. Assuming expensive fittings and a higher labour rate than mine and an awkward build, then I still reckon that has to be north of 700 "points"  Nobody would have 700 points in an ordinary house?

 

So was it some form of home automation system linked to an expensive cabinet of stuff?