The number of new homes built in London will reach record levels this year, and while the majority have sold off-plan, more homes will complete unsold this year than at any time over the past decade, according to Savills.
Total net completions are expected to peak at 46,500 this year, ahead of the minimum 42,000 homes a year target set by the London Plan, but still well short of real housing demand, which Savills puts at 64,000 homes per year. Lead indicators suggest that 41,000 homes were completed in 2016.
However, what is being built does not currently match demand, according to Savills, which estimates that 58% of demand is for homes costing less than £450 sq ft, which accounts for just 15% of the five year build forecast. It also indicates that most buyers looking for a standard 650 sq ft 2-bed flat, are hoping to pay less than £300,000, but the average London property listed for sale on Rightmove in March 2017 was just under £650,000, reflecting a huge gap between what properties cost and what (local) people can actually afford.
Over the past five years, private housebuilding starts have raced ahead of completions, supported in large part by rising volumes of off-plan sales to overseas buyers, which assist cash flow and give certainty to funders and are therefore vital to the current delivery model.