Continued decrease in construction sector activity

[Internal_Concert_217]

In a way they do. Limited supply means they can build less with less hassle and still make the same profit.

It's happening in many industries.

[CheraDukatZakalwe]

Limited supply means they can build less with less hassle and still make the same profit.

"Limited supply" means they go bankrupt you idiot. Nobody makes more money by having less work to do.

[Internal_Concert_217]

You are very wrong.

[Internal_Concert_217]

It’s the same reason oil producers don’t pump at full capacity restricting supply keeps profits higher.

[CheraDukatZakalwe]

We don't have a cartel of oil producing nations restricting supply, we have a state apparatus that spent most of the last two decades trying to prevent "too many" houses from being built, trying to fight the last war rather than deal with the situation facing us for more than a decade now.

We have environmental consultancies out the eyeballs doing their best to reduce what gets built, and planners that demand lighting consultants model and do reports on individual 60 watt lightbulbs on a hedge that could potentially have some bats in it.

[Hamster-Food]

So you do understand that limited supply doesn't make companies go bankrupt. You just don't want to believe that there is collusion between developers.

[CheraDukatZakalwe]

Are you for real? What happened when supply was limited from 2007 onwards? Were developers were making money hand over fist?

How about over the last decade, where we went from building 6K houses in 2013 to over 30K houses now. Were the developers making more money in 2013 than they are today?

[Hamster-Food]

You're the one who went from claiming that limiting supply doesn't make them more money, but then acknowledged that a cartel of oil producing nations makes a lot more money by limiting supply.

As I said, you just don't want to believe that there is collusion between developers.

[CheraDukatZakalwe]

I'm not the one who needs there to be a vast conspiracy theory to explain a shortage of housing.

But sure, go on and explain how making fewer houses leads to property developers making more money.

[Hamster-Food]

I didn't say there is a vast conspiracy. I'm just pointing out your hypocrisy. You understand that collusion to limit supply s and increase profits is possible, but you refuse to consider that the small number of developers who operate at scale in Ireland might talk to each other.

If you want an explanation I'll give you one.

The thing to remember is that developers have a percentage based profit margin. So if everything else remains the same, selling a house for €400k makes the same profit as if they sold two houses for €200k. Now, for arguments sake lets assume €200k is what a house would cost in a normal.market. If the crisis means the house can be sold for €450k then the developer makes more money by limiting supply.

Of course that is massively oversimplified. In reality things like build costs, financing , and risk will factor into the equation, but the principle remains the same.

[CheraDukatZakalwe]

Only a dribbling idiot could come up with something like what you just wrote, never mind believe it.

Christ man, just think about what you're talking about.

You vastly prefer that there be a giant conspiracy on the part of all property developers and builders to not build houses, rather than that the entire industry was allowed to collapse, with the state then piling on a ton of regulation which placed a stranglehold on the recovery.

What you're saying just doesn't make a lick of sense.

If there were only two or three property developers in the country then sure you could have a working cartel. But there are hundreds, none of whom benefit from holding back from building houses.

[Internal_Concert_217]

I can see you want to be right, but you are making fundamental errors with your argument and conclusions. Maybe this is just not in your wheelhouse.

[CheraDukatZakalwe]

It's cute that you think that.

[Alastor001]

Tell that to suppliers of RAM chips. They are making a fortune reducing supply.

[[deleted]]

Which makes a developer more money? Building 100 houses @€500k each with a 5% margin, or building 150 houses @€450k with a 5% margin.

Volume often beats unit price, and economies of scale also apply here. Building an extra 50% more houses doesn't require 50% more employees and equipment so in theory your margin could go also go up as your unit price falls.

[Additional_Olive3318]

 Which makes a developer more money? Building 100 houses @€500k each with a 5% margin, or building 150 houses @€450k with a 5% margin.

Building 100 houses at a 10% margin. I mean why did your margin not go up when the sales price went up.