Central London residential development sales volumes fell 22% in the second half of 2015 and continued to decline in Q1 2016, according to JLL.
The agent’s central London development monitor said stamp duty reform and wider economic and political factors were all taking their toll on demand.
LISTEN: Adam Challis, JLL Residential Research, on the drivers behind the London residential market.
It recorded 4,960 sales in H2 2015, a 6% decline on H1, and more than a fifth down on sales volumes in H2 2014.
Prices still increased on average by 1.9% in the 12 months to Q1 2016, but this masks a divided marketplace: central London prices fell, while those in outer areas rose.
JLL said that sales rates in central London have not benefitted from the surge in buy-to-let acquisitions seen in other parts of the country.
However, it did say that owner occupier purchases have taken up an increasing share, encouraged by reduced competition.
Neil Chegwidden of JLL Residential Research said stamp duty changes and the EU referendum were causing additional uncertainty.
“This is now the key event of 2016. If the UK elects to exit the EU a period of conjecture and debate will ensue,” he said.
Heatmap of units under construction in H2 2015. Hover over the map to see total number units in each area.
Headline price growth
| All London (%) | Core London (%) | Outer London (%) | |
|---|---|---|---|
| Q1 2016 | 0.2 | 0.3 | 0.7 |
| 12 months | 1.9 | -0.1 | 3.8 |
JLL also warned that the number of units under construction was likely to decline. It said while there were 33,500 units under construction at the end of 2015, a 28% rise on 2014, the number of units started in H2 slowed to 7,860. Furthermore, there has been a notable decline in the number of units being submitted for planning, and receiving planning permission, a result of developer responding to both political uncertainty and tax changes.
“The mayoral race will conclude on 5 May and actions to drive new housing policy will be another important shift for the industry to incorporate,” added Chegwidden. “For the government and the incoming London mayor, policy changes are transforming the residential development landscape yet again and to maintain genuine supply growth, the impacts require careful monitoring.”
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