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Prices slashed on new homes
Mira Bar-Hillel and Sri Carmichael19 May 2009
The London property market is awash with thousands of bargain new-build homes after sluggish winter sales, a report claimed today.
The prices of some developments have fallen by more than a third in the past year, according to industry analyst group London Residential Research. The glut of unsold new homes, including multi-million-pound penthouses and riverside pied-à-terres, may be a “horror show” for developers but will provide rich pickings for investors.
More than half the new-builds completed in the capital last year, some 8,500 properties, were still on the market at the end of December at much reduced prices, in contrast to the booming housing market of 2007 when only six per cent failed to sell.
The report, Residential Development in London 2009, said all tiers of the market were affected. Developers are still trying to sell a £355,000 one-bedroom flat in Battersea, opposite
Chelsea Harbour, which was completed last year, a two-bedroom flat on the 36th floor of a development in the Isle of Dogs and a £435,000 two-bed flat in a conversion development in Acton.
The study said: “Developers were hit from both ends. Rising production at one end and falling sales and rising cancellations at the other created a tenfold increase in what might be regarded as the normal level of unsold or unlaunched stock.”
Analysts say the window for bargain property could be small, predicting price rises in 2011. Although the level of unsold stock will rise to as high as 10,000 this year as a surge of developments reach completion, the supply of fresh stock is likely to dry up, pushing up property values.
The shortage is down to developers going into “hibernation” during the recession — construction stopped on as many as 100 schemes in the capital last year. The number of home-building projects fell by 43 per cent compared with 2007. The National Housebuilding Council said only 171 properties were started in London in February and 170 in March.
Brian Green, editor of The Red Book, said: “I think that those in the business will look back at 2008 as the year when the world changed.”
London estate agents are convinced that house prices have touched the bottom in some parts of the capital after a marked shift in the market's mood. Buyers are getting back in, leading to the return of gazumping, sealed bids and non-returnable deposits.
Mortgage lending also jumped in March, fuelling hopes that the bounce may lead to a sustained recovery. Last year the number of house sales collapsed by two-thirds and prices fell by about a quarter from the pre-credit crunch 2007 peak.
Reader views (11)
Agree with Mike - who in their right mind would think that £355K for a 400sq ft flat is a sound investment. Sure, the developers sold it claiming that it would 'produce 6%/year' (for 2 years while they managed it!) But then what...service charges no doubt went through the roof after 2 years, and what of the voids when it won't be rented out...sounds like an investment fit for a monekyvestor with more money than sense who is blind to economic fundamentals.
- Chicken Little, Essex, 19/05/2009 17:01
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Better off buyers shun new build because of the high number of tenants as many new flats are buy-to-let.
Flats in the older mansion blocks still sell well even though refurbishment is needed, because many people want to live in a building with established residents.
If developers did more to encourage permanent residents sales would be better for them.
- John Jones, Westminster, 19/05/2009 16:47
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No matter their price, will these houses be fit to live in, have they allowed for the relentless noise and 24 hour a day lifestyle of Londoners and indeed almost everyone in this country?
- Helen, norwich, 19/05/2009 16:22
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FTBers will not return to the market until house prices, revert to 1999 prices. We have been screaming that at you VI's for years and years.
Fine, keep prices high. We can survive a lot longer than you can, by simply renting. [Which is getting cheaper]
The banks are trying to engineer a bottom at the auction houses, but the average drop there is 50% from valuation. EA tell you, that the auction prices of thusands of properties have no bearing whatsoever on the prices of their properties!! Ha! [http://No words can describe how we feel about EA.......|http://No words can describe how we feel about EA.......]
House near to me sold for £65k in 1999.
It has been on the market for 2 years now at £240k. Recently reduced to £220k.
I will not be buying until it returns to £70k Maximum.
The housing market cannot survive without FTBers.
Banks have returned to 3x salary lending.
All this talk of green shoots in housing is a total fallasy, inflated by the vested interests, who are going broke and screaming for FTBers money.
DONT GIVE IT TO THEM.
I tell EA that i have one stipulation. I will only buy at the sold price of 1999.
The year this BUBBLE began.
- Daniel, London, 19/05/2009 15:04
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Alan, I think your comment is half right for half of the time!
- Mike, Bristol, 19/05/2009 14:40
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House prices in London are detached from reality - and earnings. House prices in 20 years time will be lower than they are now.
- Mike Wilson, Winchester, UK, 19/05/2009 13:09
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Prices are not going up anytime soon. Prices went up 190% in 10 years, so they have now dropped 21 -23% depending on who's figures you use, big deal.
Prices are still exorbitantly high and we are in a global crash on many fronts. I just hope FTB's don't listen to any ramping of prices by vested interested parties. Give it until 2003 before prices go up, if then!
For those who take an interest in the subject, there is so much bad news out there, it's still early days to even dream of this mess ending. We have the bail out trillions to pay for, that will hurt!
- T Miller, Oxted, UK, 19/05/2009 13:04
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When prices are going up it's 'Isn't it awful, noone can afford to buy a home', then when they go down it's 'isn't it terrible, our house is worth half what it was a year ago'.
Do we British actually enjoy being miserable?
- Alan, London, 19/05/2009 12:50
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£355,000 for a 1 bed flat? Does anyone think living in Battersea is worth that size of mortgage for a 1 bedroom that is probably substandard?
Why is it that builders and property owners think they know what a reasonable price is? It's the buyers and banks who control the price - it's all about what people are willing to pay or fooled (by estate agents) into paying.
- Rob, London (near Battersea), 19/05/2009 12:30
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Just shows they were overpriced to start with!
- Mike, London England, 19/05/2009 11:57
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There won't be a shortage and there won't be a bounce in the near future. Been to Thamesmeade recently ?
- Neil, London, 19/05/2009 11:55
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