London new-build sales dwindles, accounting for just 0.9% of all transactions

The latest research by London lettings and estate agent, Benham and Reeves, has shown that new-build transactions across the capital have all but dried up over the last six months, accounting for just 0.9% of all London property transactions.

Benham and Reeves analysed price paid data from the Land Registry covering all property transactions to have completed across the London market over the last six months, looking at what proportion came via the new-build sector and how this compared to the previous six months.

The research shows that, in total, 24,847 transactions completed across the London market over the last six months, marking a 37% drop versus the previous six months, with this reduction driven by a steep decline in appetite for new-build homes.

In fact, Just 229 new-build transactions completed across the London market in the last six months. This equates to just 0.9% of all transactions, with the level of new-build sales falling by 84% compared to the previous 12 months when they accounted for 3.7% of total market activity.

Across the City of London, Barking, Haringey, Lewisham, Havering and Merton, no new-build sales have completed during this time period. In a further 15 boroughs, new-build transactions accounted for less than 1% of all activity.

Newham is the only borough bucking the wider trend, where new-build homes accounted for 1 in 10 transactions over the last six months. Brent also posted stronger levels of activity, with new builds making up 4.2% of sales, while Tower Hamlets followed at 3.5%.

Marc von Grundherr, Director of Benham and Reeves, commented:

“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.

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.

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.”