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Luxury homes don't sell, says housebuilder

from Cathy (cathyvpreece@aol.com)

Telegraph : Money

Luxury homes don't sell, says housebuilder

By Philip Aldrick (Filed: 10/06/2004)

One of the south-east's luxury housebuilders has ditched the premium end of the market in favour of low-cost homes because of flagging demand.

Country & Metropolitan, which until 2002 was selling £2m homes, yesterday offloaded its final property at Gerrards Cross for £830,000. It now plans to sell £100,000 "micro-living" flats.

Stephen Wicks, chief executive, said: "We made the decision to withdraw from the premium sector about two years ago because we were concerned about the levels prices were reaching.

"The way the market has gone, it's all about affordability. Those people at the top end are staying put but there is still demand at the bottom of the market."

Although a number of builders have pulled out of the premium market to focus on homes of between £200,000 and £500,000, Country & Met's move is the most extreme. The company is targeting "first-time buyers and key workers, with prices ranging from £100,000 to £300,000".

It already has a site in Kennington, London, which it hopes to develop into 60 "very designer" 350sq ft one-bedroom flats that it expects to market at £100,000. Mr Wicks said: "There will be sliding wall partitions to incorporate the bedroom into the living room, stripped floors, balconies and decking."

By specialising in low-cost homes and urban regeneration, the company hopes to avoid "planning gain" - a development tax whereby housebuilders have to build council flats on up to 50pc of the site as a condition of planning approval.

Country & Met wants to draw up leases that limit ownership of the flats to Government-defined "key workers", such as police and nurses, even on resale. In return, it hopes to be excused from "planning gain". That way, Mr Wicks says, the company will be able to maintain its margin. He added: "The Government has created such a vast list of key workers that I don't think it will really hit the resale value."

Country & Met, which builds around 900 homes a year, has bought 10 sites in London and the home counties that it hopes will produce around 273 homes under its current plan.

The company's decision follows a profit warning by rival Countryside Properties, partly blaming difficulty selling homes over £400,000. Country & Met shares rose 7 to 188.5p.

(posted 7231 days ago)

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