Brick by Brick’s gamble with millions of pounds of council-owned land and tax-payers’ money is looking like an increasingly risky punt, as estate agents and the construction industry are reporting down-turns in the housing market.
Of course, if Croydon’s Labour-run council was using public money and property to build mainly social housing, council homes for rent, such market fluctuations would be irrelevant. However, Croydon has opted to try to use public funds to build more than 600 of its first 1,000 properties to sell for profit on the private market.
Today, the Architect’s Journal – required reading for Paul Scott, the chair of the council’s planning committee when he is in his office at TP Bennett in central London – is reporting that the construction industry is likely to contract by 6 per cent by the end of this financial year, with the value of private housebuilding schemes getting under way set to drop by 13 per cent over the same period. And that’s before Brexit at the end of March 2019.
Those figures probably don’t take account of the potential loss of 2,000 flats which Croydon was looking to build on the College Green site, where Brick by Brick’s dynamic executives failed to buy up a key parcel of land from Croydon College, throwing the whole scheme into jeopardy.
The Construction Products Association, the AJ reports, has said that building works will decline this year for the first time since 2012. “The association said that sharp falls in the commercial sector, particularly the office and retail markets, were expected to drag down overall industry output,” the AJ says.
“We have also seen increased pressure on consumer spending, which is having some impact on the housing market,” the industry magazine quotes one expert as saying. They do, however, predict an upturn in some civil engineering projects, with schools and hospital builds getting under way.
Last week, Inside Croydon reported how Hammerson, partners in the £1.4billion town centre redevelopment which is now not expected to begin until late next year, had shelved its plans for the Brent Cross Centre redevelopment and sold off other, smaller shopping centres, citing “Brexit uncertainty” as one of the causes.
It is in the housing market, though, where Brick by Brick – and huge amounts of council funds – are at risk. Although council-owned, more than 60 per cent of the homes Brick by Brick plans to build will go on the private market.
On Monday, top-end estate agents Foxtons blamed a stagnating London housing market for a £2.5million loss for the first half of the year. The company had made a £3.8million profit for the same period in 2017.
Foxtons said the property sales market in London was “undergoing a sustained period of very low activity”, and sales were taking longer to complete.
Brick by Brick, which was set-up in 2015, has yet to finish building a single home.
It says it expects its first properties to become available at the end of this year and early in 2019…
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