"For many buyers, the premium price of a new-build home simply isn’t justifiable in the current climate when existing stock is more competitively priced"
- Marc von Grundherr - Benham and Reeves
New-build property sales in London have fallen sharply, accounting for less than 1% of all transactions over the past six months, according to new research by lettings and estate agent Benham and Reeves.
Analysis of Land Registry data shows that 24,847 property transactions were completed across the capital in the six-month period, a 37% drop compared with the previous half-year. The slowdown has been driven largely by waning demand for new-build homes.
Sales volumes collapse
Only 229 new-build sales were completed in London over the period, representing just 0.9% of all transactions. This marks an 84% fall compared with the previous 12 months, when new-builds made up 3.7% of total market activity.
In several boroughs – including the City of London, Barking, Haringey, Lewisham, Havering and Merton – no new-build sales were recorded at all. A further 15 boroughs saw new-build transactions account for less than 1% of overall activity.
By contrast, Newham bucked the trend, with new-build homes making up one in 10 property sales. Brent also posted stronger results, with new builds accounting for 4.2% of transactions, followed by Tower Hamlets at 3.5%.
Developers face challenging conditions
“The new-build sector in London has come under immense pressure over the last year. With developers grappling with higher material and labour costs, drawn-out planning processes, elevated interest rates and a more cautious level of buyer demand, it’s perhaps no surprise that sales volumes have dwindled," explained Marc von Grundherr, Director of Benham and Reeves.
“For many buyers, the premium price of a new-build home simply isn’t justifiable in the current climate when existing stock is more competitively priced and at the same time, developers have had to scale back launches in order to weather what has been an extremely challenging market environment."
He added, “Of course, London remains a city with chronic undersupply of housing and new-builds will continue to play a central role in addressing this imbalance, but whilst market conditions remain challenging, it’s the rental market that continues to pick up the slack with huge demand for rental properties."
“However, as confidence returns to the wider market, we expect to see greater activity within the new-build sector and a renewed appetite from both buyers and developers alike.”
