The cost of housing makes me as dizzy as the view from a high-rise when students are paying £2,500 a month

My Week: There is a huge lack of supply of family homes in London for people on regular incomes

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The Independent Online

It was off to the City on Tuesday to brave the builders’ rubble and road diversions for chats with a couple of bosses. One, the managing director of housebuilder Berkeley Homes, gave a spirited defence of the luxury flats bubble in London – widely seen as being on the verge of making a large popping noise. The number of transactions along the south side of the River Thames has ground to a halt because of the global economic slowdown and transaction taxes. Prices are down by  10 per cent or more. But Berkeley’s MD, Rob Perrins, saw this as a minor correction and nothing more. There’s a bit of froth and once it blows away, sales will pick up again, he assured me. Believe it or not, he added, there is still a shortage of supply in luxury homes in the capital.

I’m not convinced. Another FTSE 100 property chieftain I saw the day before talked of how the sheer quantity of luxury flats being built in Battersea and Vauxhall simply outstrips the number of multi-millionaires rich enough to afford them. The only question for me is whether the “correction” in the prices of luxury flats will spread to other parts of the capital’s property scene. My view is, probably not: while there is a shortage in demand for  one or two-bedroom apartments priced at £1.4m in new-builds, there is a huge lack of supply of family homes for people on regular incomes. That, I’m sad to say, means that London’s ridiculously high prices will stay that way. Mr Perrins and I agreed to agree on that score, at least.

Fittingly, we were chatting about all this in the three-bedroom penthouse of one of Berkeley’s snazzier developments. The three-storey apartment (in my book, having stairs entitles it to shrug off the English word “flat”) had just been sold to East Europeans for £5m. Standing on one of the balconies, we looked across London to the distant hills of Kent, Mr Perrins picking out site-by-site the clusters of cranes that were his doing. A gust of wind blew the patio door behind us and we all grabbed it for fear it would lock shut and keep us trapped up there on top of the world. 

All that high-rise talk of £5m flats, foreign billionaires and luxury living left me as giddy as the room in the penthouse made me feel, with glass walls on three sides and a sheer drop hundreds of feet below. But it was when Mr Perrins told me of the price of the student flats next door that the absurdity of our capital city really made me reel. These places – built by Berkeley and sold on a few years back – are now being rented out to overseas college kids for £2,500 a month. 

We reminisced about our dingy student digs in the Eighties and Nineties. Mine in Manchester was a £25-a-week roach-infested dump above a curry house amid the ruffians of Rusholme. Mind you, we weren’t terrified of fag burns in the carpets or wine on the woodchip. I bet we had way more fun than these London princelings. 

A long, hard slog at Standard Chartered

Standard Chartered’s pad on London Wall feels more like the British Museum than a dour City institution. In the lobby of the troubled, Asia-focused bank’s headquarters squats a large, wooden Thai sala, or temple shelter, five yards square and four high. It was transplanted here from the jungles of Chiang Mai. Alcoves around the building contain art from Africa, China, Indonesia.

The last time I was here it was with my Independent colleague Margareta Pagano, to receive a rollicking from the white-haired former chief executive, Peter Sands, for reporting that moves were afoot to kick him out. Investors had become increasingly concerned about bad loans and stretched finances, not to mention Mr Sands’s divisive leadership style. 

Your story was wrong, Mr Sands declared: I have the full backing of the board. 

The board subsequently ousted him, and this time my invitation was from his replacement, the former JPMorgan high-flyer Bill Winters. Tanned, grey-haired and wiry, the American thinks and talks faster than a bullet and has a full clip of ammo on the ills and errors of the banking system during the financial crisis. 

He should know, having been in the thick of it at JPMorgan, where he headed the investment bank before getting fired by  the chief executive Jamie Dimon. The  word at JPMorgan was that Mr Dimon  saw his London-based deputy as too big a threat for the top job.

Mr Winters has a big recovery job to carry out to undo the damage done to Standard Chartered by the Sands regime. So far, he has launched a $5.1bn (£3.6bn) rights issue to recapitalise the bank (a move that  Mr Sands – wrongly – used to say was unnecessary). Into a pot marked “sell, foreclose or write off”, he has put $20bn of massive, duff loans that the bank made in places such as Indonesia and India, and is moving management control away from its centralised hub in Singapore to regional offices with better knowledge of the customers. Hopefully, that will stop the daft loans being made again.

It all makes sense, but Mr Winters is trying to drive through all of this change at a time of immense external pressure that he can do nothing about. Many of Standard Chartered’s borrowers were in the oil and commodities game and are hurting badly from the rock-bottom prices. At the same time, financial markets are horrible and near-zero interest rates mean all banks are finding it hard to make money.

Still, I guess this kind of turmoil focuses minds on which parts of the business work and which don’t. If Standard Chartered survives the turmoil,  it should emerge a healthier bank.