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.
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).
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.
"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."