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You incorrectly say:
“much of the evidence for buy-to-leave is anecdotal and there is little concrete evidence of the scale at which it is happening”.
I know first hand from dealing with large volume housebulders that the primary marketing location (where they aim to sell up to 90% of new developments off-plan) is East Asia. £50K for a marketing weekend in Beijing, HK, KL or Singapore, champagne flowing with the dregs left for the UK market, some of whom may actually want to live in these flats. There have been articles in the mainstream press regarding how Galliard Homes has been selling in this way, and obviously they are not alone in this sort of tactic – it is the industry norm.
But you might still think that is ‘anecdote’. So I refer you to Islington’s SPD – “Preventing Wasted Housing Stock” – (July 2015, pdf link below) which provides very clear concrete evidence of what is happening – 50% of new-build market flats vacant with no one ever registered on the electoral register three years after completion. If that’s not clear evidence of the wasteful effect that BuyToLeave is having on the property market, I don’t know what is.
I sincerely hope that Centre For Cities try to retain some credibility by retracting or correcting this blog article and publishing a new blog post in light of this data.
You have published something that flew in the face of what everyone could see was going on – now there is hard data which demonstrates that you were entirely wrong on how deep & widespread this problem has become thanks to a global financial market awash with quasi-free money.
Should you not publish an updated blog to correct your mistake, I think that can only suggest some sort of vested interest (property developer donors, for example) that mean that your analysis is not impartial.
Having read that ridiculous article I think it actually reinforces the argument that oversees buyers are a major factor: 20% of new builds in inner London; 49% in Central London. When we’re building just a fraction of those needed and giving incentives to first time buyers on new builds only then such a large proportion becoming unattainable tips the supply-demand dynamic even further against our 20 and 30 somethings. As they are priced out of Central and Inner London they increase competition in Outer London and the ripple effect continues. And Boris was out in China promoting the sale of developments in East Greenwich by claiming they are exempt from requirements to have social housing included. Add to this that oversees buyers don’t pay capital gains here so value property differently to domestic buyers, and builders in the comfort of ever growing demand can drive up the prices month after month without scrutiny.
very useful blog, thank you for sharing
Cllr Jon Burke
I’ll go through this in detail when I have the time but, in the meantime, the belief that “rich people from overseas are buying up expensive property which pushes up prices across the city”isn’t “perceived wisdom”, as you claim.
Between 2012 and 2014, 70% of new build properties in the capital were bought by foreign investors, with strong anecdotal evidence – including the largest new block in my ward, in which 50% of (the same) flats are in constant darkness – indicating many are kept empty. I suggest you read the Smith Institute’s London For Sale? report.
Further, while there are numerous arguments against the facile, supply-side focused measures advocated by this blog piece, the primary one is that increased supply hasn’t, and doesn’t (given the specificity of London’s housing market), place downwards pressure on house prices…http://www.capx.co/lse-pilot-study-confirms-that-increasing-new-housebuilding-does-not-drive-down-house-prices/.
If they were getting the s106 agreements and the affordable housing, the development might be acceptable – but the amounts being secured are pitiful and those they are getting are not truly affordable!