New build property sales soared in the final month of 2017, according to Land Registry data. Of the 76,327 sales received for registration by HM Land Registry in December 2017, 9,854 were newly built – a 22.4% increase on December 2016. Conversely, 56,161 were freehold, a 13.5% decrease on December 2016.
Prices also bounced back, according to the LSL New Homes Index. In the year to end November 2017, new build house prices rose on average by 10.8% across the UK, which is up on last year’s figure of 6.0%.
However, London has continued to suffer from political uncertainty and a slowing economy. According to Molior London, sales of new homes in London fell by over a fifth in Q4 compared to Q3 2017. New starts on site also fell by a fifth, however starts still out-paced sales; hence, the number of unsold units continues to grow.
“While all of this may paint a gloomy picture of falling sales, and an industry that is perhaps starting to become uncomfortable with the emerging situation, it is important to take a step back and look at 2017 as a whole, rather than just the Q4 headlines,” Molior said.
Sales across the whole of 2017 have only been beaten in 2014 and 2015. So, the combination of various marketing routes currently being used by the industry is working – just not enough to offset construction starts.
22,000 new homes sold in London during 2017, which has only been beaten by the 26,000 sales achieved in 2015. However, 27,000 units started construction during 2017.
This continues a long running trend – since 2014 18,000 more units have started construction than have sold.
30,000 units under construction have yet to be sold. There are also 1,500 ‘stock’ units, which are complete but unsold.
“Given the amount of money and effort that has been invested into a growing pile of unimplemented permissions, 2018 may not be the year during which the industry reins back on new construction starts enough to correct the imbalance with sales,” Molior said.
However, it could well be the year during which the various forms of ‘Plan-B’, such as Build to Rent, take centre stage.