Prime Central London Report – Q4 2023

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<div>Welcome&nbsp;to&nbsp;our&nbsp;Prime&nbsp;Central&nbsp;London&nbsp;Q4&nbsp;2023&nbsp;report,&nbsp;which&nbsp;tracks&nbsp;activity&nbsp;in&nbsp;the&nbsp;capital&rsquo;s&nbsp;prime&nbsp;property&nbsp;market&nbsp;during the&nbsp;final&nbsp;three&nbsp;months&nbsp;of&nbsp;2023.</div>

Welcome to our Prime Central London Q4 2023 report, which tracks activity in the capital’s prime property market during the final three months of 2023.

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Residential Roundup - Christmas 2023

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Residential Roundup - 1 December

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Residential Roundup - 17 November

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<p><strong>In Q3 2023, Molior reported that construction starts were down -74% on the 10-year average, while completions were down -37%.</strong></p><p><strong>The number of units started in Q3 2023 across London have almost halved compared to the previous quarter, with the largest falls seen in zones 2 and 4-6.</strong></p><p><strong>Numerous regulatory changes have impacted development activity, with more schemes pushed in Q2 2023 to beat the latest changes. After the June 2023 deadline, developers have to adhere to more stringent energy efficient and carbon emissions standards in
    new homes.</strong></p><p>When we compare the number of construction starts for build for sale (BFS) and build to rent (BTR), it is evident that the most significant fall in starts is BFS units; in Q3 2023 there were just 998 BFS units started across London, down from 3,519 in
    Q2.
</p><p>Q3 2023 saw a marginal rise in the number of BTR units started, accounting for 30% of total starts across London, up from just 5% in Q2. On average over the past five years, BTR starts have accounted for 29% of total starts across London.</p><p>It has become increasingly difficult for buyers to get a foot on to the housing ladder in London, resulting in increased demand for rental property across the city. It is crucial that the trending rise in the number of BTR units started continues, in
    order to satisfy demand for new rental stock.</p><p>The lack of new construction starts will have a knock-on effect on new homes stock across London, with the sustained lack of new housing starts meaning new homes risk becoming scarce commodity in the capital. Central London is likely to suffer most from
    lack of new homes being delivered. The number of units under construction across zone 1 was at the lowest level seen over the last six years in Q3 2023, and half the quarterly average in the three years pre-pandemic (2017-2019). The latest Molior
    data recorded just 26 construction starts across zone 1 in Q3 2023.</p><h2>Units started by London underground zone</h2>
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<h2>Supply difficulties across London are not likely to ease anytime soon</h2><p>Unfortunately, the lack of new housing construction does not look set to ease anytime soon. <a href="https://residential.jll.co.uk/insights/research/jll-residential-forecasts-2024-2028" target="_self" style="text-decoration:underline;">JLL's latest residential forecasts (2024-2028)</a> were released in November and include housing construction forecasts. Nick Whitten, Head of UK and EMEA Living Research
    expects &ldquo;the rate of undersupply will result in a cumulative shortfall of 720,000 homes between 2023 and 2028&rdquo;.</p><p>The report identified five barriers to new supply; build costs, financing costs, construction capacity, land availability and building regulations. There have been nine changes to UK building regulations within the past three years alone. Not only have
    these changes caused greater uncertainty, but alone have increased build costs by around 15% during this period (2020-2023).</p><p>Rising construction costs and supply chain pressures have added further pressure. The UK construction index has risen +25% compared with pre-pandemic, while the cost of cement, timber and glass is up +35%. This continues to challenge the viability of
    schemes.
</p><p>JLL have outlined construction capacity as another barrier to supply. Approximately 1 million of the 2.5 million construction workers in the UK are employed in housebuilding. But Make UK estimate there is a shortfall of circa 1 million workers required
    to meet UK housebuilding targets. This is before we even dig deeper into the number of workers expected to retire within the next decade.</p><p>More recently, new data released by the S&amp;P Global/ CIPS UK construction PMI shows construction activity contracted in October. This has largely been driven by viability concerns; a sharp contraction in housebuilding off the back of rising interest
    rates and higher borrowing costs.</p><h2>Light at the end of the tunnel</h2><p>With bank rates held at 5.25% for the second time in November, most expect we have seen rates peak. However, rates rising from 0.1% to 5.25% in 18 months requires significant adjustment; the UK base rate increased at the fastest pace in history. It has
    also reduced the number of people able to buy, with higher rates challenging first time buyers and mortgaged investors.</p><p>However, as rates begin to fall and purchasers return to the market, we do expect the viability of projects will improve. Despite this, there could still be a lack of completed and completing stock to satisfy demand.</p><p>Encouragingly, there is evidence that developers are preparing to increase activity once conditions improve. The number of applications for residential developments rose 65% from Q2 2023 to Q3 2023 (2,165 units to 3,582 units). Although this still lags
    historic norms, it is certainly a step in the right direction.<strong></strong></p><h2>About JLL | November 2023</h2><p>JLL is a leading global professional services firm specialising in real estate and investment management, with $16.6bn annual revenue in 2020, operations in over 80 countries and a global workforce of over 90,000. With over 7,000 employees and 15 offices
    in the UK, we support our investor, developer and occupier clients at every stage of the property lifecycle across both commercial and residential asset classes. This includes land purchase, access to capital, planning, development advisory, leasing,
    building management and sales.</p><p>JLL&rsquo;s Residential and Living team consists of over 300 professionals who provide a comprehensive end-to-end service across all residential property types, including social housing, private residential, build to rent, co-living, later living, healthcare
    and student housing.</p><p><sup>Disclaimer: <sup>&copy;</sup> 2023 Jones Lang LaSalle IP, Inc. All rights reserved.</sup>
</p><p>Data within this report is based on material/sources that are deemed to be reliable and has not been independently verified by JLL. JLL makes no representations or warranties as to the accuracy, completeness or suitability of the whole or any part of
    the report which has been produced solely as a general guide and does not constitute advice. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of JLL. JLL, its officers, employees
    shall not be liable for any loss, liability, damage or expense arising directly or indirectly from any use or disclosure of or reliance on such report. JLL reserves the right to pursue criminal and civil action for any unauthorized use, distribution
    or breach of such intellectual property.</p>

JLL – The construction starts fall across London

<strong>In Q3 2023, Molior reported that construction starts were down -74% on the 10-year average, while completions were down -37%.</strong>

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JLL Residential Forecasts 2024-2028

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Prime Central London Report – Q3 2023

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While this year&rsquo;s British summer was a typical tale of contrasting conditions, the UK housing market experienced similar levels of changeability between July and September due to ongoing economic uncertainty.

While this year’s British summer was a typical tale of contrasting conditions, the UK housing market experienced similar levels of changeability between July and September due to ongoing economic uncertainty.

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Residential Roundup - 20 October 2023

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JLL – Can improvements in PBSA provision for students help solve the rental crisis?

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JLL – Can improvements in PBSA provision for students help solve the rental 			crisis?

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Residential Roundup - 1 September

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Picking through the array of economic indicators and deciphering what this might mean for the UK economy, let alone the cost of your mortgage, remains a challenge.

<strong>Picking through the array of economic indicators and deciphering what this might mean for the UK economy, let alone the cost of your mortgage, remains a challenge. Better news on inflation, with CPI rates dropping back to 6.8%, quickly countered by stubbornly high core inflation. Wage growth excluding bonuses hit 7.8% in the three months to June, welcome news for stretched household budgets, but not necessarily for the overall health of the economy.</strong>

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<p><a href="https://res.cloudinary.com/global-cms-assets-np/image/upload/v1692190699/resi/gb/Articles/PDFs/Big_6_Report.pdf" target="_blank"><button class="Button primary" style="text-align:center;">Download full report</button></a></p><p><strong></strong>This report incorporates data from the JLL UK Cities index, comparing changes in prices and rents across mainstream and prime developments in each city.</p><p>There have been some obvious challenges facing the housing market over the past year. Higher rates, tightening household budgets and weaker overall market sentiment are all impacting prices and activity. Although we have seen the rate of growth in prices
    slow, city centre markets are proving resilient, supported by strong demand from students and young professionals. </p><p>In the rental market, severe lack of available rental supply is driving rents. The Big Six cities recorded average annual rental growth of 14.3% in the year to June 2023.</p><p>The increases in rents across the Big Six clearly demonstrates not only the demand for city centre living but also the need for more homes. This is not exclusive to the rental market, with a requirement for more homes of all tenures needed to address
    demand.</p><p><a href="https://res.cloudinary.com/global-cms-assets-np/image/upload/v1692190699/resi/gb/Articles/PDFs/Big_6_Report.pdf" target="_blank"><button class="Button primary" style="text-align:center;">Download full report</button></a></p>

Big Six Residential Development Report, Summer 2023

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The JLL Big Six Residential Report compares activity, prices, and rents across Birmingham, Bristol, Edinburgh, Glasgow, Leeds, and Manchester

The JLL Big Six Residential Report compares activity, prices, and rents across six UK cities outside London: Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester.

<strong>The JLL Big Six Residential Report compares activity, prices, and rents across six UK cities outside London: Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester.</strong>

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Residential Roundup - 11 August

Positive news on the state of the UK economy has been hard to come by over the last 12 months. The news is still mixed, but second quarter UK GDP figures have exceeded forecasters expectations.

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<p>PRIVACY NOTICE</p>
<p>Jones Lang LaSalle (JLL), together with its subsidiaries and affiliates, is a leading global provider of real estate and investment management services. We take our responsibility to protect the personal information provided to us seriously.</p>
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