Luxury London new build prices cut as number of new homes on the rise
- Credit: PA Wire/Press Association Images
A developer advertising price reductions on a luxury development in Maida Vale? No you haven’t entered a parallel universe, just the north London property market in 2016.
What does a developer do when their properties just aren’t selling? Usually they quietly reduce the prices, lay on special incentives to buyers and maybe even get the estate agents acting for them to do some sneaky relisting on online portals to disguise the lack of movement on the development.
Not so London Buildings, the developer behind The Villas in Maida Vale. In fact, the company has taken the polar opposite approach by hiring an ad agency who have apparently encouraged them to make a feature of these very price reductions.
“You can thank global economics, Brexit jitters, Panama, stamp duty hikes, market corrections and the rest – for making your dream home that much more affordable”, reads the advert, an admission that is disarming in its rarity.
Billed as “the best value brand new houses in Inner London”, the eight properties in a gated development have been reduced from around £1.4 million according to Philip Green at Goldschmidt & Howland, to £1.295 million – a reduction worth slightly more than the nine per cent stamp duty charge that would be due were the property bought as a second home or buy-to-let.
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In the wider context, this developer’s declaration is refreshing but their struggles are par for the course.
More than one third of properties in Hampstead sold in the first quarter of this year achieved a sale price that was more than 10 per cent lower than the initial asking price, despite a surge in transactions.
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And yet the number of ‘luxury’ new builds in some stage of planning or construction in inner London has risen by more than 40 per cent in 18 months, according to figures from buying agency Property Vision.
The research found there are 19,000 units currently under construction across prime London postcodes compared with 13,400 units when the same survey was carried out 18 months ago.
It offered a conservative estimate of 26,133 new ‘prime’ London units coming to market over the next few years compared to only 4,870 units sold for £700,000 or more on the second hand market in 2015.
“The gap between the pipeline of new stock and the annual second-hand market in the wider area is large – very large,” said Charlie Ellingworth, director at Property Vision.
The biggest issues with luxury oversupply have been seen in south west London at the ill-fated Battersea Power Station development but several thousand new prime units are either under construction or at some stage of the planning process in north London postcodes too.
Mr Ellingworth urged caution to buyers, while acknowledging that high quality new properties in undersupplied markets – which applies to most of inner north west London – remain good buys.
He said: “The word ‘Prime’ has become overused in recent years, alongside ‘iconic’. As the market adjusts their real meaning will become apparent and those who believed the developers’ hyperbole may wish they had taken more time – and advice.”