Developers are building flats they won’t be able to sell and it’s close to midnight for London property prices

My Week

On Tuesday I was having a drink with one of London’s best-known property barons. We were in Claridge’s (naturally), knocking back Bloody Marys (delicious) and no sooner had we discussed how well he was doing personally (very) than our thoughts took on a darker complexion. Next year, he said with certainty, London property prices will crash.

There is simply too much supply and not enough demand. In the last financial quarter alone, 6,000 new apartments were finished, each costing more than £600,000. Currently there are 41,000 homes and flats under construction or being topped out in London priced at north of £1m.

It’s crazy and, he asserted, too late. Only people without children want to live in apartments, he said – and that means first-time buyers, or couples without children, or buy-to-let investors, or those for whom London is not their main home, or couples whose children have grown up. Looking at those segments, first-time buyers are being priced out – they cannot afford to raise the deposit and cannot secure a mortgage at that level.

The flood of foreign money that was pushing so much of the boom has turned to a trickle. The Russians are not buying in the same numbers because of Vladimir Putin’s crackdown on locals holding cash overseas. China is also having a corruption purge. The foreigners market, the property  baron said, was all but exhausted. 

As for Brits, forget it. City bonuses are not being paid in cash, at least not like they used to be. Meanwhile the Government is doing its best to take the shine off buying to let, imposing extra stamp duty and tax. Finding buyers for two or three-bed apartments at these sorts of prices, he said, was going to be extremely difficult. 

Not least, as well, because our own attitude to property – in London, definitely – has changed. Today, said the property magnate, we’re obsessed by the price per square foot. We never were before. Once, we were happy to shell out for anything as long as we liked it. Now, we’re much more canny, constantly comparing and contrasting and looking for value. 

So the idea of paying a high six-figure sum for what, let’s face it, is little more than a box – albeit one with smart fittings – high in the sky in somewhere like Vauxhall is a non-starter. 

Vauxhall was a deliberate choice. For anyone not familiar with this area south of the Thames, its skyline is bristling with cranes and partially built towers. It’s the sort of scene we’re more used to seeing in Shanghai than London. Every apartment is billed as “luxury” and the prices tend to start at more than £500,000. It’s impossible to imagine they will be taken. 

What will happen, he said, is that a developer, just one, will not be able to sell, won’t cover their costs and will crack. That’s all it needs for the bank on one block to pull the plug. “It could be a small one with 200 units, it doesn’t matter.” That will be enough to send shockwaves through the market, and bring prices crashing down. “Right now we’re just touching 12 o’clock. I can feel it.”  

Forget shopping – we’d rather be entertained

Claridge’s by the way was heaving. Both bars were full, with not a spare table to be had. The restaurant was packed for afternoon tea. The lobby was teeming with people. But in the West End, the shops appeared relatively quiet– several in nearby Bond Street were devoid of shoppers, with only bored-looking staff standing around. It compounded the recent theory of a leading retailer that rather than purchase objects, people are finding other ways of spending their money – with entertainment and eating and drinking out being the preferred alternatives. 

Mobile phones as a force for good

One person who gives the impression of not being interested in money is Jimmy Wales. I met him this week and among the questions was, had he ever thought of charging for Wikipedia? Not at all, he replied. He always saw it as a free service – an educational information tool for everyone on the planet in their own language. 

Of course, it has a value – Wikipedia is now the fourth-biggest website in the world in terms of hits. But its owner is the Wikimedia Foundation, a US-based charity. 

Mr Wales’s latest venture is The People’s Operator, a mobile phone network where  10 per cent of your bill is donated to a charity of your choice. He didn’t start TPO but has become the executive chairman of an operation where a quarter of the profits are distributed to good causes. The simple premise is that the huge amount of cash a mobile operator otherwise splashes on marketing is given to charity. That way, mobile phones can become a force for good. 

TPO was launched in the US and has now come to the UK. Because it doesn’t advertise, it can only gain customers by word of mouth or mentions such as this. In time I predict more and more of us will be switching to it. 

I wish it could be my birthday every day

Which brings me on to Three and the mobile operator’s seasonal advert – precisely the sort of expenditure that Mr Wales was talking about. It’s the story of Noel, a boy born in December whose birthday is always overshadowed by Christmas. Three wants us to remember those whose birthdays fall at Christmas and wish them “merry birthday”. 

It has sent out accompanying bumf saying that 76 per cent of people born in December wish their birthday fell in a different month. “Research also showed that many of those...  are unhappy heir birthdays are overlooked every year, with more than half (53%) claiming their friends don’t show up to celebrate their birthday, opting for Christmas work parties instead.” 

The press release concludes: “We have a psychologist on hand for comment, who can speak about the effects and what it’s like to have a Christmas birthday.” 

My birthday is on Christmas Eve. Presumably I must be in the 24 per cent who are perfectly happy with their lot, as I’ve found it to be the perfect day for a birthday – most people are off work and they’re in celebratory mood. Give me December and Christmas Eve for a birthday any time. 

Next, an email will land from Three saying it has kept on the psychologist to help those whose birthdays land early in the new year. 

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