"Competing on value isn’t always possible for developers facing higher construction and labour costs, but even small demonstrations of value – whether through pricing, design, or differentiation – can be decisive in a market where buyers have more choice than usual"
- Oliver Knight - Knight Frank
After five volatile years, the UK property market has found its rhythm. Leading fixed-rate mortgages have hovered just below 4% through the summer. The number of mortgages approved by lenders for house purchases each month, a good indicator of future borrowing, has broadly matched the 2019 average since the beginning of the year. Meanwhile, house prices have climbed a modest 2.1% in the past twelve months, according to Nationwide.
This equilibrium is being held in place by competing forces. On one hand, a large number of buyers delayed moving while interest rates were at their peak. The return of sub-4% fixed rates has encouraged many to act. On the other hand, economic uncertainty remains high. Consumer confidence is improving, yet still sits in negative territory. These conditions have made buyers particularly price-sensitive: home sellers cut asking prices marginally during July, which, combined with strong supply, helped push transaction volumes to their strongest July since 2020, according to Rightmove.
This price sensitivity is especially pronounced in London's new homes market, where in the past two years the ability of developers to demonstrate value – whether through pricing, design, or positioning – has had a significant impact on sales rates.
At The Broadley in Marylebone, by Mount Anvil, buyers have reserved 63 units since the launch in early July. Asking prices have averaged £1,450 per square foot during these initial sales, allowing buyers to secure early-phase value, both compared with neighbouring projects now in their later, more expensive phases and relative to the higher prices expected in subsequent phases at The Broadley itself. The development has also seen a notable resurgence of off-plan investors, some purchasing five years ahead of completion.
At Retro in Fulham, almost all apartments in the nine-unit scheme were sold within six months of the project's launch in March 2024. Prices averaged £1,095 psf, putting the scheme in line with local resale stock but well below comparable new builds, where values typically range from £1,300 to £1,400 psf – albeit those schemes benefit from a wider range of on-site amenities. Retro is a unique conversion project with retained original features, providing a distinctive alternative to both new build and second-hand homes in the area.
At The Clay Yard in West Hampstead, more than 50% of units were sold within the first nine months of launch in 2023. The scheme was priced a little over £1,100 psf, slightly cheaper than a nearby project, which was marketing at £1,200 psf. Since then, nearly 100 units have been sold with minimal discounting required – a result of both the scheme’s competitive pricing and a lack of new development in the surrounding area.
Competing on value isn’t always possible for developers facing higher construction and labour costs, but even small demonstrations of value – whether through pricing, design, or differentiation – can be decisive in a market where buyers have more choice than usual. There were more than 3,500 complete and unsold units in the capital at the end of June 2025 – up from just under 3,000 in 2023 but still below the 2018 peak.
Availability will begin falling as mortgage rates ease, boosting buying activity amid a sizable drop in new construction. In the first half of 2025, developers started fewer than 2,200 new private homes in London – just 5% of the government’s target. Meanwhile, the number of unsold homes under construction has been falling steadily for years, down from more than 30,000 in 2018 to a little over 20,000 today.
That suggests that, while price sensitivity may be the dominant theme now, scarcity will be the story three years from now. Just 9,100 private new homes are currently scheduled to complete during 2028 and 2029, compared to a national need for 176,000 new homes based on current delivery targets. Regulatory hurdles have left many developers hesitant to initiate new projects, but schemes launched in the next twelve months and completed in 2028 or 2029 will enter one of the most supply-constrained markets London has seen for more than a decade.
