Real Estate

Construction of new homes at six-year low in London


The number of new homes breaking ground in London has dropped to its lowest level in six years as a slump in the luxury apartments market is compounded by Brexit concerns. 

Construction of some 3,700 units started in the third quarter of this year, the lowest figure since the same quarter in 2012, according to Molior London, which monitors property developments in the capital. 

This brought the total of new homes started in the first three quarters of this year to about 17,000, putting the total for this year on track to be the lowest since 2013. 

Planning applications show that this trend will continue, according to Molior. The number of new applications in 2018 is set to be the lowest in four years. 

Sales of new-build homes have also dropped to a six-year low, with 4,160 sold during the third quarter, and the annual total is also set to be the lowest since 2012 if the current trend continues. 

“To a certain extent much of this should be expected given that the country has recently voted twice for a period of uncertainty — both in the 2016 European Union membership referendum and in the subsequent general election,” Molior said. 

The slow sales were not spread evenly across the market, said Molior. Developments in zone 3 and further out, where prices are lower and buyers tend to use the government’s Help to Buy equity loan scheme, are selling relatively well.

Specific, popular developments closer to the centre are also chalking up sales, the group said, such as one within the former BBC Television Centre in west London. 

“There are buyers in the market, but they are faced with a lot of choice and will only pay for the best on offer,” Molior said. 

The decline in the new-build market has been led by central London, where expensive developments planned during a boom in investor purchases are now struggling to sell units. 

Changes to stamp duty have deterred some buyers, while a downward trend in prices has cut into the numbers of investors buying homes. However, Molior said that some Chinese buyers were still purchasing London property, despite the market slowdown and restrictions on capital outflows from mainland China. 

The decline in construction numbers presents a challenge for London mayor, Sadiq Khan, as he seeks to push up housebuilding in the capital in response to an affordability crisis. 

Molior monitors developments across the capital but does not cover those with fewer than 20 units.



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