Property News | UK in new-build bonanza

Browse By Subject

Money

Property

Social

Professional

UK in new-build bonanza

Thursday, March 11, 2010

Source: Catherine Deshayes

Sales of new-build homes rose by a remarkable 214% in the last full quarter when compared to the same period in 2008, according to Knight Frank's ‘London Residential Development 2010 review',

This growth is considerably higher than the average increase of 68% for the entire London property market (i.e. including resales).

Liam Bailey, head of residential research, Knight Frank, commented: "The central issue in the new-build market is not an overhang of heavily discounted units, but a lack of available supply. The current supply of stock available to buy is down by 20% compared with Q1 2009. The number of built-complete new homes available for sale across London hit an all time low at just 975 in total in the third quarter of 2009.

"Factors such as interest rates remaining low, the weak pound stimulating international interest and government supported schemes targeting the new build sector and first time buyers in particular have all contributed to this strengthening market.

"While the recovery in prices in the new-build sector is not quite at the level seen across the central London market as a whole, there has been evidence of price growth on some schemes in recent months, for example Embassy Court in St. John's Wood. However for developers, the improvement in pricing has been felt more by the evaporation of discounting rather than headline price growth.

"One of the most notable changes in the new build market has been the shift in balance of investors to owner occupier numbers buying new homes. While the ratio used to be 30:70 owner occupiers to investors, it is now 70:30 owner occupiers to investors. The change is slowly influencing developments as buyers looking for themselves are more interested in property layout and specification. Still, while we would love to think the return of the owner occupier signifies the emergence of larger flats for buyers outside of the super-prime market, affordability still provides an effective brake on the aspiration of buyers. Evidence from Knight Frank's applicant data confirms subtle changes to requirements, with a noticeable rise in demand for larger units across prime central London markets. The successful schemes will be those that create environments in which people want to live.

Source: www.knightfrank.com