London housing starts fall
Drivers Jonas Deloitte’s latest London residential crane survey has recorded a sharp decline in the number of new housing developments starting.
Only 35 new large schemes have been recorded since the last survey six months ago, a significant fall from the 81 new schemes this time last year and 55 six months ago.
Activity at these new schemes comprises approximately 3,700 units, roughly half the number reported in the previous survey six months ago.
The survey counts every scheme over 50 unitsunder construction across Greater London.
The summer 2012 survey found that inner London boroughs accounted for around 75% of the new units underway, with particular activity in boroughs such as Lambeth and Wandsworth. Inner London boroughs will deliver 52% of the total units currently under construction.
Although new activity is slowing, there is a rising number of schemes progressing to completion, as a result of the rapid pick up in new starts recorded 18-24 months ago. This survey saw 7,300 units complete, up almost 50% from the last survey.
Drivers Jonas Deloitte head of research Anthony Duggan said: “While schemes started in the more buoyant 2010/11 period are now progressing through to delivery, meaning current completion levels are looking more healthy, this latest research shows a clear decline in the number of new schemes starting. While it is too early to call this slowdown in new activity a clear trend it does reflect the unease in the wider London residential market.
“Our data shows that developers are focussing their activity on the more resilient Inner London areas, which is indicative of rising caution with regard to the health of domestic buyers and also the continued confidence in the prime markets and overseas buyers.”
The regional split in activity is not uniform. East London is still dominating residential construction activity, accounting for 30% of total units under construction. The southwest has seen the largest increase in activity, with total units underway rising by 8.5% over the past six months, while the west also saw a smaller increase. In contrast, both southeast and north London have seen falls in the number of units under construction.
The research also highlights the continuing lack of availability of houses in the capital, as opposed to flats. Ten years ago, houses accounted for more than 25% of new residential stock in London, but in schemes starting in the last six months, only 5% of units are houses. This reflects that three quarters of new starts are in Inner London, where space constraints and land prices often make flats more viable for developers.
Mr Duggan concluded: “The slowdown in new starts is unlikely to impact the market in the short term with 2012 and 2013 having a large volume of committed construction activity. Indeed, completions are expected to increase from their 2011 low in 2012. However, if the volume of starts remains low over the next survey period, as we suspect it might, the recovery in completion levels may be relatively short-lived as the lack of new schemes starts to bite.”
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This article was published on 22 Jun 2012 (last updated on 22 Jun 2012).