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New housebuilding in London to halve as sales fall, Savills warns
Completions of new homes in London by private builders will plummet to just 18,000 by 2021 as developers adjust to lower rates of sales in the capital, Savills has warned.
The property consultancy released its forecasts for the London property market today, showing total completions are expected to peak at 46,500 homes this year, above the 42,000 target set in the London Plan.
However, it warns private starts will total just 21,500 this year, with completions by the private sector dropping to 18,000 within four years as builders adjust to lower sales rates.
The consultancy said this will “leave London chronically undersupplied in new homes” and called for policy intervention and “an additional model for housing delivery” to combat the slide in development.
Savills also warns homes finished and unsold will reach 2,800 this year – up from 1,000 in 2016 and the highest figure seen in London this decade.
It says this is due to developers oversupplying the top end of the market, resulting in a slowdown in sales.
Savills estimates 58% of demand in the capital is for homes costing less than £450 per square foot, but this accounts for just 15% of the five-year build forecast. In contrast, there were 1.6 starts for every sale of homes in the £1,000 per square foot bracket.
“To a large degree, the fact that London almost hit its official new homes target last year should be seen as a massive success, but these figures suggest we are at the limit of what can be built under the current delivery model,” said Edward Green, research analyst at Savills.
“This year may present some harsh realities for a number of developers, but the bigger issue remains that of a city chronically undersupplied in the homes it desperately needs. An additional model for housing delivery is needed, that adds to the output of major house builders and the market sales model.”
It said build-to-rent and a strengthened programme of affordable homes development were “part of the answer”.
“In order to increase delivery in the market segments it is needed most, there need to be further changes to the way in which land is brought forward, including greater public sector land release,” it added.
“Proactive planning, proposed in the Housing White Paper, is a useful early step, but other policy measures are required, especially from the mayor.”
