Prime Central London New Build Sales Down By 41%

May 15, 2017 by

Prime Central London New Build

Completed new build sales have now been registered for last year, and London Central Portfolio has examined the impact that Brexit uncertainty and residential tax changes have had on this sector.

Land Registry data has confirmed that prime central London new build sales have been most affected. In the last quarter of 2016, completed sales of new flats were down 41.4% over 2015, and average prices fell by 8.7%.

The London Central Portfolio confirmed that London’s luxury property market witnessed the biggest sales reduction. High foreign ownership taxes, three Stamp Duty increases over the past five years, and increases of up to 15% on some sale prices have all had an impact, including a 57% reduction in the sale of new builds valued at over £5m.

Sales figures for prime central London new build homes valued at under £1m were also down by 38%. This may be due to less availability of new housing stock at this price point, however, as homes valued at under £1m now account for only 22.5% of new build sales in prime central London areas.

London Central Portfolio CEO Naomi Heaton said that these grim figures represent a small proportion of the prime central London market because development options are fewer. She said that last year there were only 867 new build sales, representing only 14.6% of total sales of property in general.

Stamp Duty Additional Rates has Impact

Government tax changes had an evident effect. Buyers hurried to beat last year’s April deadline for the new Stamp Duty additional rates on second properties, as evidenced by the fact that 44% of central London’s new build sales took place during the first quarter. The first quarter actually witnessed the highest ever number of prime central London property sales, so the impact of the stamp duty additional rates is clear.

Inner London also saw large decreases in new build sale completions at the end of last year. Average prices for new flats were down by 2.1%, and overall, sales were down 3.9% in the last quarter of 2016. There was also a substantial fall of 29% compared with the third quarter.

Concerns for Inner London’s New Build Market

The luxury property market in Inner London saw the biggest decrease in new build sales. Flat completions were down 51% for properties above £5m, and the final quarter of 2016 registered a fall of 34.6% in new build sales valued at under £1m. This sector accounts for 88% of new builds in the region.

Ms Heaton said that developers will certainly be worried by the condition of Inner London’s new build market. Projected investment returns in Battersea Power Station have been lowered to 8.23% from the original 20%. In some areas, over-priced commodity-type properties are over-abundant, which softens the market, especially when times are less than stable.

She said that with higher-value sales to overseas buyers generally offsetting the cost of providing more affordable housing and necessary cash infusion to reinvest into new development, the government could have real problems meeting its affordable housing goals if the trend continues.

Ms Heaton stated that the significant fourth quarter fall for new flats under £1m were also concerning. She attributed the reduction to new caps on mortgage lending as well as future economic uncertainty.

About CRL

CRL’s specialist team arrange structural defects insurance to protect thousands of new ventures throughout the UK and Ireland. CRL assist in sourcing fast, flexible cover, arranged by the in-house team who are dedicated to providing the highest quality of customer service.

Anyone engaged in a building project or managing a portfolio of new-build properties that require mortgages, will require a 10-year structural insurance policy on the property. CRL recognises that every opportunity is different, there are no tick boxes and no set criteria – just an appetite for adventure!

To find out how you can start working with CRL and purchase a structural warranty, visit what we cover.

 


You may also be interested in...

  1. Property Industry Reacts to Snap General Election

      Prime Minister Theresa May has confirmed that a snap general election is being called because the success of Brexit has been compromised by a division in Westminster. She added that while she was not in favour of an early election, it was the only way to guarantee both security and certainty for the future….

    April 25, 2017 by

    Read more
  2. Property Experts Say Crossrail 2 Key to Solving Housing Crisis

    Over 60 leaders in the property industry have backed a proposal to approve Crossrail 2, saying that it would unlock over 200,000 homes and help solve London’s housing crisis. In a letter to Chancellor Philip Hammond, property industry leaders said that Crossrail 2 will transform connectivity and transport capacity for less-developed areas of London. The…

    April 12, 2017 by

    Read more
  3. Research Shows 36,000 London Homes Owned Offshore

      Transparency International has published new research revealing that secret offshore companies own over 36,000 London Properties. The properties total 2.25 sq miles and are held by invisible companies registered in secret offshore locations. The research, which analysed information held by the Metropolitan Police Proceeds of Corruption Unit and the Land Registry, found that three-quarters…

    April 20, 2015 by

    Read more