Residential development activity in Greater London has increased considerably over the past six months, with 223 schemes now under construction compared to just 169 six months ago according to Drivers Jonas Deloitte’s latest London residential crane survey,

Analysis shows a 32% rise in schemes under construction while the number of units under construction within these schemes has risen 25%, bringing the total units to 35,380, up from the 28,150 reported in the last report (Winter 2010).

All London sub-regions have seen an increase in units currently under construction, with North London seeing the biggest increase in new activity with almost 3,000 units commencing. The East remains buoyed by activity at the Olympic site and continues to see the most activity overall with almost 10,000 units currently under construction.

Clive Pane, partner and head of planning and development at Drivers Jonas Deloitte, said: “The detail of the survey shows that construction starts are up, which is “good news” of sorts, but good news coming from a market that was in shut-down mode during 2007/08. This shows through in the completions around London, which our survey shows are now at an all time low. The bigger picture is that supply is running at around half of London’s stated need of 30,000 units per annum plus and, as the impact of reduced affordable housing grants kicks in, I expect supply to remain at this or even lower levels in the future.

“In terms of pricing, what this means is that we will continue to see firmer pricing in Greater London than the main forecasters predict. Analysis shows that most forecasters have consistently under estimated the impact of supply shortage on growth rates. This year is no different. So in a year when 12 months ago most people were predicting price reductions, we have seen firm growth – 5% - in most parts of London.

“The long term implication is straight forward. As soon as the currently tight monetary conditions ease, and they will, we will move back towards historical growth rates for London, which have averaged just under 10% per annum over the last three cycles since the war,” said Pane.

The developers’ favoured unit type is unsurprisingly still flats, the majority of which have two bedrooms. Studios account for just 3% of units under construction, while the share of houses has risen slightly, to 5%.