BUZZ-UK property stocks: London supply shows no signs of abating

** Excess supply of luxury new-build London housing back in the spotlight after Capital & Counties trading update

** After reporting no new sales in the quarter to Feb 24, Capco says it has sold 9 units of its phase 2 development in Earls Court for the next 3 month period

** Co is planning to build 7,500 new units in Earls Court (one broker estimates 5,700 still to be sold excluding affordable homes)

** Morgan Stanley (Xetra: 885836 - news) says medium-term prospects for London-focussed developers is challenging due to rising supply and falling demand

** Two other brokers see figure as disappointing despite the company pointing to a pick-up in enquiries

** Shares (Berlin: DI6.BE - news) out on loan in Capco have continued to climb (6 pct of free float or 30 pct of shares available to borrow)

** Similar picture for London-focussed peer Berkeley Group (5.4 pct shares out)

** Short case based on the fact oversupply at the upper end of the London market has been underestimated