New-home sales in London are plummeting as lockdowns hurt demand and investors hold back from building apartments.
Sales of newly built homes totaled 4,190 in the fourth quarter, down 27% from a year earlier, according to preliminary data compiled by researcher Molior London. The figures are based on transactions at developments with at least 20 units, which are predominantly apartment blocks.
Apartments are out of favor in the capital despite a boom across the wider U.K. housing market, with a temporary tax holiday and pent-up demand boosting home value growth to itshighest level in six years. New construction is being delayed assupport measures for homebuyers are set to unwind and more Londoners shun city living amid the prolonged pandemic.
The industry “appears to be taking a cautious approach to investment,” Molior London said in the report. The slowdown has been most pronounced in central London, a market that’s particularly dependent on international travel and “has been quiet throughout the pandemic,” the researchers wrote.
Central London last year saw the lowest number of construction starts in a decade, and the fewest home sales since 2011. Based on the current rate of deals, it would take 2.9 years to clear all the unsold homes if no new development begins, according to the report.
By comparison, London’s Zone 3, which includes more-suburban areas of the city, had the second highest sales rate on record last year.
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