The mood in the central London residential development market has improved at the start of 2017 but the number of new homes being built as plummeted due to falling sales and prices.
Indeed, the number of properties breaking ground is down by 75% year on year with house builders put planned projects on hold, and in some cases, scrapping them altogether, according to the latest report from real estate firm JLL.
The data from the report shows that just 1,270 residential properties were started in zones one and two in the final quarter of 2016, the lowest total for five years. This continued the trend of 2016 with the first three quarter of the year seeing particularly low start figures.
‘The number of new unit starts in the final quarter of 2016 was the lowest quarterly total since the fourth quarter of 2011 and the figures also show that planning applications fell by 27% in the fourth quarter of 2016 and launches also declined.
The report explains that an increase in stamp duty at the upper end of the market, in particular, continues to have a detrimental effect resulting in a 10% levy up to £1.5 million and 12% above that figure, which largely explains why fewer property transactions and lower prices are being achieved.
It also points out that the number of homes changing hands in central London has been plummeting with a 24% drop recorded in the fourth quarter of 2016 to just 1,880 transactions, while prices for newly built homes have fallen by 5.7% year on year.
