I wrote late last week about the huge number of signals suggesting that it really is time for the London property market to start to see major price falls. One of the signals I mentioned was the fast-rising supply of homes that those working in central London can reasonably live in.
By that I mean properties actually in London, but also those within reasonable commuting distance of it. That’s a thought neatly backed up by an article in the Sunday Times over the weekend. The headline was “The biggest rail expansion since Victorian Times may be the answer to the housing crisis in the capital.”
Some £100bn is currently being invested into the overground and underground rail networks in London. There’s Crossrail; there’s the extension of the Northern Line down to Battersea; the Thameslink programme; and the HS2 line to Birmingham.
All these new railways do two things. First, they make existing housing stock along their lines more commutable (analysts tell the Sunday Times that one million extra homes will be commutable once all the work is done). And second, they encourage builders to put up new homes along them.
According to Savills there are some 230,000 new properties on the way directly as a result of railway development – with 100,000 along the new commuter routes and 130,000 around the city’s stations. Think 10,000 around Kings Cross, Paddington and London Bridge.
TfL and Network Rail (one of the country’s biggest landowners) are also getting in on the developer game. The latter has shortlisted some 300 acres of land for building – some of it in super-central areas such as Southwark (where MoneyWeek’s not very glamorous offices are) and Earls Court – and that’s just in the first phase. We have often noted here that demand creates its own supply (hooray for markets), and so it is in London.
Still, if you are looking for a deal, you might not have to wait until all the construction is done. In my original piece I pointed to various other signals (from the collapsing wealth of Russian oligarchs, to the political war on wealth, and the fact that prices are already falling) and John Stepek tells me he is putting a list of the new signals he has noticed in the magazine this week. The return of liar loans is his favourite. Mine is a statistic I didn’t see last week: according to Helen Davies, writing in the Sunday Times, “for the first time in more than a decade there are more people leaving the capital than entering it”.
But prices are already falling fast. They are down 14% in Kensington & Chelsea over the last year. I have also received several emails about distressed sales in prime central London in the last week. One is for a flat that has been cut in price from £2,650,000 to £1,999,999 – a fall of over 30%. “They have to sell”, says the agent. Clearly.