blessing in disguise.. at least there'll be demand for all those houses on the market
True.
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- Thread starter The_Unbeliever
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True.
Plz explain why u think so?, i would think with a shortage of work the builders will be dropping prices to get the work, not to mention a surplus in building materials so prices will drop to try turn the stock.
?
Moederloos
Honorary Master
I tend to agree with the other poster.
If I have 4 items to sell, and only four, I will sell them for more so I can make enough profit to survive. And I will hold out on selling those 4 for the best possible price.
On the contrary.
Building material will become more expensive.
What profit building material supply companies make with volume now,they have to make up, with less sales.
They cannot fire employees (most companies are geared for volume sales)therefore their costs have to go up in order to pay their workers.
The same applies to construction companies.
Their overheads remains the same, yet their sales are less.
Well im in the liqour trade and having dead stock on the floor is very bad for cash flow so to get cash flow going prices will drop. im sure this applies to any business unless the owner has huge cashflow to play with and can afford to keep the dead stock.
diff is, you have stock to replace the items that you sell, you need to "move" the items to make space for other items to sell .. with the housing, not going to have any stock to replace the items that you *do* sell, so you need to make sure that you make the *most* from the items that you can sell to see you through to "who-knows-when" when you can build more items to sell
I can see where you are coming from.
Problem is ,the construction industry is very labour intensive.
In your case your argument is correct.
You should also realise that construction companies stand to lose their companies,as a lot of money goes into the planning stages before construction actually commences.
That is now dead money.
The interest on that money will kill a lot of companies,with resultant unemployment.
Should you also consider that 1 construction worker is responsible for the upkeep of about 8 other people,you will appreciate the effect this will have on the economy.
Ok fair enough i get what you saying, i was thinking and talking about the companies that supply those construction companies with the materials, surely the materials prices will drop, lets say company X just imported 10 containers of cement and spent 10 million, now with this postponement they not going to sell the cement as quickly as expected, to get rid of it they need to drop prices.
If there is an oversupply of cement it would be true,yes.
Unfortunately, there is a shortage in cement at the moment.That actually pushed the prices up.
To offset this cement was imported.
All that will happen is that less cement will be imported.
South African cement makers are producing at max. capacity at the moment, with more employees working for the companies.
They also have the same problem.
Overheads the same, sales lower.
Lots of money was also invested in logistical support like drivers, vehicles etc. wich soon will be idle.
The instalments on the vehicles will still have to be paid.
It is a hell of a problem coping with all that, if there is no money coming in.
In my opinion building would soon become a very expensive excercise.
The easiest way to see what is happening would be to watch the big building companies performance on the stock exchange.
I have not checked but you can bet no one wants those shares anymore!
Moederloos
Honorary Master
Unfortunately we also reap what they have sowed.
Many a true word was spoken in jest!
The Cosmos
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ditto