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Homes that £20,000 of sweeteners can't sell
Mira Bar-Hillel10 Feb 2009
A "goody bag" of cash and vouchers worth almost £20,000 has failed to attract buyers to an upmarket development in Wandsworth.
Developer Ipsus expected its 103 flats to fly out of the marketing suite when the scheme was launched in autumn. When only 27 were sold by the end of the year, the sweeteners were brought in as a "January sale".
But it has failed to produce a single further buyer, and the company has extended the deal to the end of this month.
The Ipsus 01 development is in Hardwicks Square. Each one- and two-bedroom flat, priced from £249,995 up to £430,000, includes solid wood flooring, underfloor heating, Italian kitchens with stone worktops, continental bathrooms and balconies.
But secure underground car parking spaces cost an extra £20,000 each - more than the value of the incentives. The sweetener package includes £10,000 off the asking price, a year's supply of Waitrose vouchers, a Zones 1 and 2 travelcard, and council tax paid for the year. There are also gym, cinema, and DVD deals.
Nick Vaughan, a director at Hamptons International, said: "The idea was to do something different that people could see as a direct benefit in these cash-strapped times.
"The developer recognises the need to provide incentives over and above the quality of the development alone.
"The incentive was initially intended to take the form of a 'January sale'. But due to the lack of response this has now been extended to the end of February." Developers are facing a sales crisis, with about 20,000 finished homes standing unsold across the country. As a result, many are offering incentives.
But buyers now realise that if they haggle they can obtain a far larger cash reduction - up to 20 per cent in some cases - than the five per cent value of the supermarket or DVD rental vouchers.
Last week housebuilder Bellway said the profits it expected to make on each sale could fall by more than 50 per cent because of the need to offer "significant incentives" - including cash discounting and part-exchange on attractive terms - in "virtually every private sale". Barratt is offering special deals for its shareholders, but the incentives are outweighed by the fall in the company's share price.
A major problem affecting sales is the difficulty in getting mortgages.
Some lenders, such as Britannia, Scarborough and Skipton, will not lend on a new or recently constructed place. Others, like the West Bromwich, want a deposit of up to 50 per cent.
The reason is that new homes are more difficult to value and lenders consider them more at risk of being overpriced.
Reader views (22)
Put bars on the windows and open it as a prison. It looks like one anyway and would be more secure than an open prison.
- Sarah Bradshaw, Enfield, Middx, 11/02/2009 14:26
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Just drop the price. They won't of course because that would set a market value so instead they manipulate the figures for as long as possible by given "discounts" and incentives so that they can continue to market them at inflated values and yet sell them at massive discounts. Horrible flats, hugely overpriced in a terrible area. Why would anyone buy them at any price given the choices nearby?
- Bruce, London, 11/02/2009 14:07
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Take off £100,00 and people might rush to buy!!
- Brenda, Esat London, 11/02/2009 12:16
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I'd be a buyer for #175k. Cash. And not a penny more. Nice to wipe the hitherto smug smile off these developers' faces...!
- John, london, 11/02/2009 11:20
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Total jokers. The area surrounding this "development" is massively overdeveloped and yet again Wandsworth Council have not consider the impact of traffic to this area of Wandsworth which is already overloaded with traffic.
This have been hastily built and the developer thinks by slapping in a "Italian Kitchen" and some cheap wood flooring makes it a desirable place...you must be joking. What's the betting that these will soon be available to "Social Housing" tenants within the next 6 months??
- Peter, London, 11/02/2009 08:41
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Forget Waitrose vouchers and 5% off DVD rentals. People are not stupid. If you can't sell, lower the price. A one bed in such development should sell for less than 200K. I pity the ones who bought last December for £250K when they will read that article.
- John, London, UK, 11/02/2009 08:40
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103 flats in a small block like that? Prices between £240-400k for a rabbit hutch?
Who said human greed was dead?!
- Jock, London, 11/02/2009 03:12
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Yuk - I would be loathe to live there if I was paid by the developer. What an ugly, horrible block on the corner of a busy street. NO THANK YOU.
- Shirley, London, 10/02/2009 22:15
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Pssssssstttt Mr.Developer, try a discount of say 40%. You might sell a few then.It is still a flat above a shop on a busy road.
- Paul, london, 10/02/2009 17:46
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i'd rather live here for £250k than 1 hyde park for £80m.
- Jonnie Welbeck, London, 10/02/2009 17:38
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I agree with the other replies - woefully overpriced. These new builds are about cramming as many people onto a postage stamp as possible. Look at the workmen for scale, look at the windows on the corner, theres a support floor, heating and raised wood floor between them too. Now look at the 7 stories that are residential.... 103 flats! "From" £250,000, i.e the pokiest. People are getting wise to this tat.
BOOOooooo! to Gordon for allowing the minimum space on new builds to be reduced during the building boom.
- Ian, London, 10/02/2009 17:21
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what a dump .. road side corner near an itersection. do the developers think people don't actually care where they build these overpriced flats ?
- Joanna, london, 10/02/2009 15:54
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What do they expect? At £249,999 +, with only 80% mortgages at a push, you'd need savings of at least £50k plus funds to cover all the costs and stamp duty. How many of us have that much? Particularly with the threat of redundancy hanging over so many of us......
- Victoria, London, 10/02/2009 14:48
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Well I suppose it's better value than paying £430k for a flat in the block beside it, where you'd have to sit and look at it . . .
- Roz, Chamonix, France, 10/02/2009 14:28
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First of all, the prices are far too inflated plus once you moved in the service charges are out of hand and every other month something new comes along and your services charges keep going up. WHY?????
Being honest the flats should go for around £125,000 and not even a penny more regardless of the area.
- Ankur, London, 10/02/2009 14:27
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£249,995 up to £430,000 to live in a place like this? You must be joking! If people go for it then they are fools.
- Daniel, London, 10/02/2009 13:26
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The sale prices are inflated by over 50% get real dude! People see beyond these cheap gimmicks.
- Vasco, London, 10/02/2009 13:20
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People continue to bleat on about"what my property is worth!"without the reality of the situation sinking in.A house or flat is only worth what somebody is prepared to pay not what the seller thinks they should pay.
- Paul, london, 10/02/2009 13:03
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In hard times gimmicks don't work - many flats have become grossly overvalued and these probably are too.
- Tony Gee, London, 10/02/2009 12:10
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Well, thats got to be one of the ugliest excuses for a building I've seen for ages. Looks more like a factory than a residence. No wonder they aren't selling! Should have got a decent architect on the job! Creative, aesthetically pleasing, form, grace - mean anything to anyone?
- Ando, London, 10/02/2009 11:11
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"New homes are more difficult to value and lenders consider them more at risk of being overpriced." says it all really. A two bed flat, even with wooden floors, is still a starter home. If the average salary in London is less than £30,000, then taking sensible mortgages of 3.5 times salary, a 10% deposit and, being generous, a "luxury" premium, would put the valeu of these flats at about £150,000.
So, why aren't they selling? They are way over-priced. Can I cliam my £5?
- Rob, London, UK, 10/02/2009 10:42
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Having to pay a huge premium for parking in a new development is just silly. Parking provisions should be introduced as part of the planning regulations, it is NOT good enough to simply put one or two shared car schemes outside a newbuild and call it a sustainabile transport system. Some people need cars for their jobs and until developers start to understand that providing parking but at a massively increased cost, it is little wonder the places are sitting empty!
- Alanj, London, 10/02/2009 10:37
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