House builders are starting to see the first signs of a recovery in the UK housing market, with the values of land gradually improving and their off plan sales improving they can see the first green shoots of recovery in the house building sector.
One of the remaining challenges for the sector is down valuing, when property surveyors are recommending lower property values than that estimate by the developers. The values of the finished homes on new build developments is the most critical number in a development appraisal these figures make up the GDV, gross development value. Once the land costs, build costs, and overheads are removed the remaining balance is the developer’s profit. If the property developer over estimates the final sales prices the results can be financially devastating for the development project and the property developer. With more land owners looking to complete joint venture as a result of a less fluid market for residential development sites, more and more investment consortiums are pawing through the figures and estate agents comparables to make sure the sums add up.