London’s Stock of Unsold Homes Under Construction at Record HighBy and
It will take 1.3 years to clear unsold units: Molior report
Excess supply is worst for capital’s more expensive new homes
The stockpile of unsold London homes under construction rose to a record as developers ramped up supply, despite a housing market that has been suppressed by higher taxes and economic uncertainty.
The number of properties being built or completed that have yet to find a buyer rose to 12,952 units from 12,601 at the end of last year, according to a report by Molior London seen by Bloomberg News. That’s the biggest surplus since the researcher began compiling the data in 2009. Based on current sales rates, it will take 1.3 years to clear the excess supply, the longest period since 2010, the report showed.
A spokesman for Molior declined to comment.
“The disconnect between construction starts and sales is a concern,” Molior analysts wrote, noting that the greatest gap exists in the 1,000 pounds ($1,330) per square foot to 1,499 pounds per square foot price bracket.
“For 1,500 pounds-plus per square foot, starts have consistently beaten sales since 2012 and, while the difference narrowed during 2016, there has been a sharp uptick in surplus starts during 2017,” they wrote. The average size of a U.K. home is 94 square meters (1,012 square feet), according to an English Housing Survey report published by the government in March.
Starts continued to outstrip sales by about a quarter, even as sales of new and under-construction London homes jumped 24 percent in the third quarter from a year earlier, according to the report.
The news of the increasing housing surplus comes as a mix of higher taxes, affordability issues and economic uncertainty cause London home prices to fall at their fastest pace since the aftermath of the financial crisis. Early data point to home values in London declining 2.7 percent in September from a year earlier, the most since 2009, according to Acadata and LSL property Services, confirming the capital as the worst-performing part of a slowing U.K. market.