"pete" wrote in message
...
On Fri, 30 Apr 2010 14:03:26 +0100, dennis@home wrote:


"Bruce" wrote in message
...

Our land is ridiculously expensive. It is also the main source of
profit for most large housebuilders. They buy large amounts of land
and hold it for many years as an investment. When the price has risen
sufficiently to make them a good profit, they build on it.

That does not make economic sense.
You want to buy something, increase its value and sell it as soon as
possible so you can get on with the next bit.
Remember that they will have to pay the going rate for their next plot so
the "gain" is eaten up by the next purchase.

But it does help to soak up excess profits without having to pay tax on
them.
Then in future years they can realise (i.e. sell or build on) the asset.
It's
like shops buying in stock in good times to cushion against lean times.

Stock can deteriorate and go out of fashion. Land doesn't.
Stock needs storing and that costs. Land doesn't.
Buying stock contributes to economic growth. Land doesn't.

Hoarding land creates an artificial land shortage ratcheting up house prices
keeping people from buying homes. Storing stock doesn't.

Big difference. Speculation on land should be stopped. It was responsible
for the 1929 and 2008 crashes.