Murky Depths

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Housing

Many homes struggling to sell on new developments?

If we rewind a few years much of the press was awash with news stories showing queues to buy new homes as soon as they went on sale.

Much of the press are reliant on ads from developers so this cosy love-in was hardly a surprise, though it was based on actual events. Whether that deserved to be covered so heavily was debatable, but feeding the frenzy and your main advertisers is important so it was.

Anyway, that all seems a long time ago now. One thing seen recently is adverts for major developments still on display online months or even years after completion.

The Reach in Thamesmead

It’s probably not a surprise when organisations like Peabody want £280,000 for a small 1-bed flat in Thamesmead opposite Belmarsh Prison. Or you could get shared-ownership and pay rent AND a service charge on top of a mortgage – and be a leaseholder to boot.

If that doesn’t float your boat how about £455,000 for a 1-bed flat in Deptford at the junction of two railway lines? Help to Buy of course. Maybe £635,000 for a 2-bed?

Help to Buy has helped in pushing the price of new-builds up in relation to local market prices. Many buyers havn’t realised they’re in negative equity and the next buyer won’t pay that same premium. Developers have already pocketed the income.

Purchases reduced

It appears not only have domestic buyers dropped – with many priced out – but overseas buyers have too. Capital controls in China played a part, and now the corona virus is hitting.

Last week we saw just how developers have gained from rising prices and Help to Buy. Persimmon revealed latest results with an average profit of £71k per home. That’s up from £20k profit per home a decade earlier.

Still, providing more truly affordable homes is “not viable” at many sites apparently.

Build to Rent

This problem is not only affecting homes for sale but homes to rent under “Build to Rent” which some have heralded as the saviour for housing. Not at these prices.

The Essential Living tower in Deptford still have flats at all sizes available months after completion. Given a 1-bed flat can cost £2,200 a month to rent that’s no big surprise.

The question is how many props will the Government continue to come up with to support the building industry? And how long until the whole thing falls over? For now, many homes don’t appear to be selling even with ever more demand and more people forced into overcrowded homes or living with parents. It can’t go on forever.

10 Comments

  1. HK

    Hopefully the Government does not try more schemes to prop up the housing market.
    It’s precisely these schemes that are part of the problem.
    If the properties are not selling or being rented, then it’s clear that the prices are too high and they will eventually find their level.

  2. Graham

    Exactly HK, property prices are far to high to buy in London and for many renting privately is also out of the question as private rents are also far to high and out of the reach of most local residents on their salaries.

    A private rent on a new development is in access of £1000.00 per month and often much more than than this.

  3. Dave

    The numbers just don’t make sense when you take ground rent and service charges into account.

    • HK

      Agreed, i just don’t know how your average person does it, that’s renting or buying!

  4. And yet developers keep building. By the way, that puff video about Deptford foundary is a relevation. Who knew Deptford was so chi chi? Not me who walked the foetid high street only last week and noted all the sad looking buildings.

  5. Dave

    Just saw a pop-up advert. 3 bedroom, 3 bathroom penthouse available on the 18th floor in Kidbrooke Village for over £1m. One bathroom is a toilet / cloakroom but hey ho.

    I was involved early on fighting against overdevelopment of the new Kidbrooke development. When the initial plans increased the number of homes from c1,900 on the Ferrier Estate to over 4,000 we all made it very clear that we did not want the developers to replace the Ferrier tower blocks with new tower blocks. Well despite promises that was all ignored on the basis Kidbrooke was classified as a major transport hub where high builds were permitted under the Mayor of London’s plan. Having a bus stop and one train line up and down doesn’t count in my books.

    • HK

      I’ve have also mentioned this on this blog.
      I just see Kidbrooke Village as the Ferrier 2.0!
      They are making the same mistakes over again with over-developing the area.
      No one should be daft enough to pay though prices (if you could pay £1m you wouldn’t be looking at that area) and those who do buy will probably be buy-to-let investors who will be letting under short-term tenancies – so the community and care for the area never really builds due to the quick turnover of residents!

  6. CDT

    I agree with property prices being out of the reach for many local people to buy or rent. Also when they said a transport hub I thought there would have been more bus routes extended to serve the Kidbrooke area and improvements to the train services serving Kidbrooke Station. To cater for the huge rise in the local population.

    • Dave

      There is a new 400 home development starting north of the station and the developers are making the same promises about transport improvements. There is also a belief that hardly any of the home owners will be using the trains during the rush hour.

  7. Wait people, what about the new route 335 that runs between North Greenwich and Kidbrooke? Could be as good as it gets.

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