Developers in London are building an increasing number of homes despite slowing sales.
Unsold residential units in London increased by more than a third last year, with 800 more homes on developers’ books at the end of 2014 than in 2013.
EGi’s London Residential Research said the number of units in the construction pipeline still on the market rose by 35% last year and was now 24% above the five-year average.
This is despite developers pushing the button on the highest number of starts for two decades.
Tower Hamlets saw the biggest fall in sales in inner London, down by 667 units on last year, followed by Southwark, where sales fell by 32% or 216 homes. Sales rose in prime markets, and were up by 4% in outer London.
Developers are also sitting on more than 7,000 unlaunched units. As a result, prices increased, with capital values up by 22% and per sq ft prices up by 34% to £900.
“It could be that developers are simply drip feeding the market, but the figures do give us cause for concern,” said Nigel Evans, head of LRR. “Rapid and unprecedented rises in the number of units being built without the corresponding spike in sales could be a precursor to oversupply and a drop in prices.”
