“At the end of 2013 we thought London’s residential developers were going at it full throttle. We were wrong. In 2014, the afterburners kicked in and the rule book was thrown out of the window.”
That was the first line from our recent yearly analysis of London’s new-build housing market. In case you missed it, nearly 25,000 private units started (a 25% increase on 2013) and at year-end 36,000 private units were under construction (a 39% increase). However, completions were up by only 4%, which we concluded was down to one thing: towers (defined as being 20 storeys or more), which take longer to build and cannot be phased.
In the past three years we have witnessed an almost exponential rise in towers across London, with 32 towers starting last year. This compares with 16 in 2013 and nine in 2012.
If anywhere epitomises what is happening in the capital, it’s Newham, and in particular Stratford. The east London borough saw an explosion in schemes starting last year – up 963%. In terms of numbers, that equates to 2,591 individual private units starting in 2014, a year earlier that figure was just 269.
So are we seeing an Olympics effect?
Quite possibly. The graph above shows a stark increase in starts in Stratford and the new E20 Olympic postcode. Just 660 private units were started between and including the years 2009 to 2013 (an average of 132 pa), whereas last year alone 1,680 units were started.
If we compare construction activity in the 30 months prior to the Olympics with the 30 months post-Games, the figures are even more remarkable. In short, 396 units went under construction prior to London 2012, whereas 2,192 residential units were started after the Olympics. This equates to a 553% increase in activity. Again, mirroring London as a whole, many of these starts have been in the form of towers.
So has this huge increase in activity been down to the Olympics effect? Well that’s the $64m question; and impossible to quantify. I am sure many involved with the Games and its legacy will say yes, and it is hard to argue against, but a general increase in market confidence, among many other factors, will no doubt have also helped.
Paul Wellman is senior researcher at EGi London Residential Research
