In the first quarter of 2023, sales of new homes slumped by 39 per cent compared to the same period the previous year, to 3768, according to data compiled by Molior London and seen by Bloomberg News.
That’s a worse performance than during the Covid-19 pandemic, and the lowest figure since 2012. The researcher calculates the numbers based on transactions for projects with at least 20 units. The slump is also reflected in the capital’s building activity. The first three months of 2023 saw the smallest number of completed new homes since 2014, falling to 3,076.
The figures spell out the misery facing London’s housing market, as many ordinary buyers continue to struggle to afford new homes. The government programme Help to Buy, which aimed to help people onto the housing ladder for the first time, closed to new applications last year.
New buyers are also contending with the effect of higher interest rates and a cost of living crisis: in the first quarter of this year, mortgage payments in London took up 61.1 per cent of an average first-time buyer’s take home pay, the highest level since 2007.“Most major housebuilders are now openly advertising incentives to regain sales momentum,” the report authors said, including contributions to mortgages and utility bills.
But sluggish building activity suggests that London’s housing pressures are unlikely to improve in the near future. The pipeline of new homes is also set to shrink. If the number of planning applications continues at the current pace, 2023 will be the lowest since at least 2009, according to Molior.
