Demand for posh newbuilds in London soars but supply wobbles
The lack of stock in Prime Central London means upmarket buyers are looking south of the river such as at Hines’ project at 18 Blackfriars Road.
Demand for newbuilds in London is soaring with the total number of offers made in April rising 9% compared with a year earlier while viewings were up 17%, latest data from Knight Frank shows.
However, housing delivery levels in the capital remain below target and completions are trending downwards, while new starts have fallen 20% in a 12-month period and new permissions for major residential developments have collapsed to a record-low.
In early 2024 the net volume of viewings and offers made was largely positive against 2023 other than a dip in March when inflation rose at a stronger rate than expected.
Knight Frank’s data also reveals that the number of prospective buyers registering their interest in purchasing a new home last month in London increased by around 15-20% compared to April 2023 for the mid-to-upper markets. The most popular price points are either £750,000 up to £1 million or £2 million plus.
Volume of newbuilds
Anna Ward, Associate in the Residential Research team at Knight Frank, says: “The increase in demand for newbuilds, combined with a cut in interest rates now expected in August, should feed into higher reservation volumes later this year.”
The lack of available stock in Prime Central London, means that buyers at the top end of the market are seeking out opportunities in new areas.
Ward adds: “Southbank is a key example of this, with demand for prime London property now spilling south of the river.
“This is creating new opportunities to build homes such as US developer Hines’ 433-home project 18 Blackfriars Road (main picture), which was granted planning consent in April, and Bankside Yards, a 1.4 million square foot mixed-use development set to include a total of around 600 homes.”
INTEREST RATE CUT
Raul Cimesa, Partner at Knight Frank and Head of London New Homes, adds: “The earlier than expected election date next month offers the prospect of greater political stability, which will inject some fresh momentum into the market.
“With an interest rate cut now widely expected by the financial markets in August, we anticipate that buyer appetite will further increase in the second half of 2024.
“From our vantage point in the London new homes sector, we are cautiously optimistic. While we navigate through these uncertainties, a positive change might be on the horizon, providing for a more stable marketplace with lower interest rates, mirroring the sentiments across the broader market.”
