JLL Residential

Central London Residential Development Report: September 2016


New alarm bells for London's housing supply

There may be further trouble ahead for London’s housing supply problem. The number of new build starts and the number of new planning applications have dropped like stones during 2016. An already cooling sales market, stamp duty changes and Brexit can all claim part-responsibility.

But apportioning blame will not solve, avert or reverse the inevitable slide in construction activity. The sales market is exhibiting signs of improvement, but progress is likely to be steady with developers exercising caution. The new Prime Minister and the new Mayor of London need to step in, and step in fast.

Starts down

The number of units to begin construction in Central London during the first two quarters of 2016 has slowed notably. It is true that Q4 2015 witnessed an exceptionally high number of starts but the decline during 2016 has nevertheless been acute.

During Q4 2015 there were 5,260 unit starts across Central London but in Q1 and Q2 this year there have been 1,840 and 1,830 respectively – a staggering 65% slowdown!

Sales market improving

The new build sales market has begun to brighten during the latter part of Q3.

Since late-August we have noticed a good deal more interest when launches have been made with enquiry levels also up on existing live developments. This bodes well for the remainder of 2016 although we still expect demand levels to be down compared with a year ago when investors were more active.

Overall the market is quieter and more subdued. The number of sales across Central London during H1 2016 was down 12% on H2 2015. 

central london development market
core sub markets lead new starts