Looking for any more proof that the London property market has come very firmly off the boil? In Monday's post we noted that rents have been falling in central London (though interestingly, LCP data suggests they have been rising for very small flats).
But almost of more interest is the news that Barratt has been reduced to cutting prices at the high end by 10%, and to selling its London homes in bulk deals to investors to cope with the fall off in demand for them. By the end of December last year it has completed on 367 houses and flats. That's under half the number of completions at the end of December 2015.
And it isn't just Barratt that has noticed the huge change in the London market. In our roundtable two weeks ago, one of our participants suggested that anyone who wanted to be in the residential or commercial property markets should head for Birmingham. And that is exactly what Berkeley Homes is in the middle of doing. It has made its first shift out of the southeast in ten years and opened a division there.
This all makes complete sense. I wrote about Birmingham a year and a half ago. I was a tad early to the party but the arguments I made then stand. It offers good value. Large firms have been moving staff and opening offices there. It's technology and manufacturing sectors are showing good growth. It is the top regional city destination for young people leaving London (it beats Bristol!). It has a can do council. And finally it has some really nice places to live –both in and around the city.
In the 1960s the UK had what some of the press referred to as a "Birmingham problem". The city was too big. It was creating too many jobs. Too many people lived there. And too many more people wanted to live there.
The five counties in and around Birmingham lie at the strategic heart of manufacturing Britain," said the now-defunct Statist magazine. They have the "fastest rate of population growth and the highest ratio of working population to total population in the UK . . . they help to underpin the whole nation's economy by their output of capital goods, their direct exports and their supplies of products and work to other regions."
Average wages were higher in Birmingham than in London. This sounds impressive. But to the government of the day the intense concentration of commerce and wealth was considered to be a very bad thing.
It caused housing problems (a study in the early 1960s suggested that more than 500,000 people needed to be "decanted" from the region to prevent overcrowding); it meant the area was always "chronically short of labour"; and it created endless rows about slum clearances, housing policy and the value of Birmingham's proposed greenbelt. So instead of nurturing Birmingham's brilliance, the UK's increasingly centralised state made it share: between 1945 and 1963 "some 200 industrial firms or projects had been steered out of the region" to "parts of Britain with labour to spare."
Read the full article here.