A tale of two cities: Sales of London new-build homes have plunged as sky-high prices put off buyers

 
Emma Haslett
Follow Emma
Development Of Battersea Power Station Continues
Battersea is one of London's new-build hotspots (Source: Getty)

New research suggested sales of new-build homes in London have almost halved - despite the fact the city is in the grip of a housing crisis.

Research by London Central Portfolio (LCP) using figures from the Land Registry has shown only 1,491 new-builds in inner London have been sold so far in 2016 - 43 per cent down on the same time last year. Compare that with older properties, where 13,194 transactions have taken place, compared with 13,190 during the same period last year.

Read more: Surprise: No one can agree on what the most recent house price data means

What's putting off buyers? The sheer cost might provide a clue: the average price of a London new-build is now just shy of £1m, at £914,532.

Although the research also suggested prices are falling: in Battersea Nine Elms, one of London's biggest building sites, prices are down eight per cent on their 2014 high. Meanwhile, across London as a whole, prices are up 23 per cent.

At the top of the market, this has been exacerbated even further. In so-called Prime Central London, the capital's most expensive areas (the likes of Kensington & Chelsea, Mayfair, Bloomsbury, etc), just 271 new builds were sold in the first six months of the year.

What's positive for those looking to buy is that the pipeline for new homes is full to bursting. Developers have submitted applications for 17,494 homes, including 111 towers (fun fact: that's one new tower being applied for every three days).

IN NUMBERS: LONDON NEW-BUILDS

£914,532 - average price of a London new-build home

1,491 - number of new-builds sold in the capital this year, down 43% from last year

13,194 - number of older homes sold in the capital this year, compared with 13,190 last year

271 - number of high-end new-builds sold this year

8% - amount average prices in Battersea have fallen from their 2014 high

111 - number of planning applications submitted for towers in London this year. That's one every three days

106,208 - number of new homes with planning permission

51,904 - number of new homes with planning permission in Tower Hamlets and Wandsworth

The number of homes given approval has hit 106,208 - up 20 per cent on 2013. Those include "mega-clusters" such as Tower Hamlets, and Battersea Nine Elms, where 18,665 homes will be built.

Naomi Heaton, LCP's chief executive, suggested a heady mix of uncertainty over Brexit and recent tax hikes was deterring those who tend to splash out on new-builds in the capital - namely, foreign buyers.

"It appears foreign investors, the majority buyer of new developments, may finally be turning away," she said.

Read more: Asking prices for London's homes have slumped

"These properties typically sell at a significant premium, averaging 25 per cent, over older stock. History demonstrates that a saturation of over-priced commodity-style property leads to softening prices, particularly during times of economic uncertainty.

“With 51,904 new units slated for Tower Hamlets and Wandsworth alone, this will take a heavy toll on these areas where there is already extensive oversupply and the buying pool is shrinking thanks to ever more tax hikes," she added

"In the cluster areas, this could have a detrimental knock-on effect for existing home owners, adversely impacting the value of their own homes as well as the economy as a whole, if the Exchequer’s tax take in all likelihood diminishes."

Related articles