train crash waiting to happen in London property

antrobus

Generali wrote: »

To be fair, isn't that 1-1? We did see inflation in commodities.

At the present time, aren't the prices of "food, metals and energy" all falling?

Generali

antrobus wrote: »

At the present time, aren't the prices of "food, metals and energy" all falling?

They are but they did spike in price a little after the article was written.

tkane

NorthFin wrote: »

I read a stat in the FT yesterday that absolutely blew my mind.
There are now 54,000 homes planned or under construction “in the priciest areas of the capital”. Most will cost “close to or above the £1m mark” and most are two-bed flats.
Here’s the mind-blowing bit: in the same areas last year, just 3,900 homes were sold for more than £1m.
That would put potential supply at almost 14 times annual demand.
Welcome to the train crash about to happen that is high-end, new-build property in London…

http://moneyweek.com/the-train-crash-waiting-to-happen-in-new-build-property/

Who’s going to buy these flats?


That picture just sums it up, they are building these £1M 2 bed flats in areas where those are the kind of peple have lived for years. Little old lady with a shopping bag, normal people, who can enver afford £1M property.

Families don’t want two-bed flats. ‘Normal’ people can’t afford £1m-plus properties. Even buy-to-let won’t work – factoring in service charges, you’d have to be taking in £40,000 a year in rent to make a £1m property worthwhile. That’s a lot for a two-bedder.

Developers will sit on the land for years or even decades if they can't achieve the prices they want.

At the moment with any major development developers drip feed supply.

For instance look at Chobham Manor in Stratford, they are drip feeding only about 20-30 properties per release...and they will keep doing this for a number of years so there will never be an oversupply even though they will have built thousands of flats by the time they are finished.

Same with Battersea Power Station, last release only had 500 flats (13,000 demand) and the next release will not happen until 2016!!

So whilst they might have planning permission, many of these developments will never see the light of day as they may become unfeasible but more likely the developers will stagger the release of these flats over many years.

Blacklight

NorthFin wrote: »

Forget ‘Occupy’ – this is ‘Unoccupied’
The average wage in London is just above £40,000. The average London house price is £580,000. Anger about this is mounting every day – and it only increases when people see so many flats sitting there unoccupied.
So the idea that 54,000 new-build flats are going to be flogged off to foreigners, then allowed to sit empty is just absurd.

54k is about enough to house 0.5% of people in London, but as all 8.6m earn exactly the average wage and there's no rich banker types I guess they'll just have to try and flog them all to foreigners.

cells

Thrugelmir wrote: »

Isn't that down to land availability?

More are made from conversion of existing use i.e. redundant commercial premises.

The new build figure includes conversations

Loughton_Monkey

tkane wrote: »

......For instance look at Chobham Manor in Stratford, they are drip feeding only about 20-30 properties per release...and they will keep doing this for a number of years so there will never be an oversupply even though they will have built thousands of flats by the time they are finished.......

So you want a builder to start, work on, and complete 1,000 houses [tying up, say, £100 million of their own cash], and only then hire enough sales staff to sell the whole damned lot all at once!

Such houses would be a whole lot more expensive. Is this what you want?

Or would you join the inevitable lobby of opinion griping about "...... there they are. 1,000 houses half completed, and we are all desperate to buy them but we have to wait until July next year..... why, oh why, oh why can't they complete a few at a time so we can start buying and moving in....."