London Home Presales Slump to Four-Year Low as Supply JumpsBy
Number of unsold units under construction hits record high
Sales fell 22 percent in 2016 on sales tax, Brexit vote
Sales of London homes under construction last year dropped to the lowest level since 2012, leaving developers with a record number of unsold properties.
Purchases of homes currently being built fell 22 percent to 20,695 from a year earlier, according to a report by Molior London seen by Bloomberg. The number of unsold properties that are under construction surged 14 percent to 25,139 units in the period, the highest since the researcher began collating data in 2009, the report shows. A spokesman for Molior declined to comment.
London’s residential real estate market is being buffeted by headwinds ranging from near-record prices to higher sales taxes and uncertainty surrounding the terms of the U.K.’s exit from the European Union. Home values in the British capital fell for eight consecutive months through November with central luxury properties declining the most, LSL Property Services Plc and Acadata said this month.
“Stubborn affordability issues still persist in London” and are affecting the wider market, said Faisal Durrani, head of research at broker Cluttons LLP. “The drop in the pound is something that international buyers are watching, but those investors focus on London’s most prime locations.” The pound has fallen about 17.4 percent since the Brexit vote.
Berkeley Group Holdings Plc, London’s largest homebuilder, fell as much as 1.8 percent and Barratt Developments Plc and St Modwen Properties Plc declined as much as 2 percent.
A record 24,817 homes were completed last year and, based on current sales rates, it will take 1.3 years to sell the properties that have yet to find a buyer, the Molior report shows. The measure, which assumes no further stock is completed, stood at 0.8 years at the end of 2015.