London housing starts are set to slow after 2017, as uncertainty in the sales markets continues to affect sentiment, according to Savills research.
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London housing starts are set to slow after 2017, as uncertainty in the sales markets continues to affect sentiment, according to Savills research.
The research reveals that total net completions are expected to peak at 46,500 this year, ahead of the minimum 42,000 homes a year target set by the London Plan, but still well short of real housing requirement, which Savills estimates to be 64,000 homes per year.
Too much expensive stock is failing to meet actual demand for products, according to Savills. Some 58% of demand is for housing priced below £450 per sq ft, but only 15% of supply is priced below this level.
Slowing sales have meant considerably more homes are unsold on completion, particularly in the prime market. Savills says that between 2013 and 2016, 13,500 more homes were started than sold and Savills estimates that unsold finished homes will total 2,800 this year, up from 1,000 last year.
Savills says oversupply is particularly acute above the £1,000 per sq ft mark. There were 1.6 starts for every sale above the £1,000 per sq ft price point during 2015 and 2016, accounting for nearly half of the 13,500 overshoot.
“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.
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