The number of residential towers coming through the planning system of late has been widely publicised – there are currently more than 400 in London’s planning pipeline. What is less well-known, however, is how many units these towers will contribute to the capital’s housing stock and, in doing so, how the market is becoming dangerously polarised.
Here at London Residential Research we have totted up the number of units that have started from towers of 20-plus storeys. From 2007 to 2012, on average a little over 1,000 units started construction each year. However, since 2013, as with the number of tower starts, the number of units has seen near exponential growth, within those towers close to 7,000 private units starting last year alone.
Along with that, and at the opposite end of the spectrum, last year saw 6,600 permitted development starts. This compared with just 331 the previous year and none before that, as the legislation had only just come into force. As the graph below shows, the number of homes starting construction in 2015 from both towers and permitted development combined made up 45% of the market. An astounding amount, far exceeding anything witnessed before.
While last year saw a record 30,000 private homes starting construction, take away the permitted development schemes and those in towers of 20-plus storeys, and the corresponding figures look notably less impressive. In fact, the rest, or what we might call “normal starts” are down on both 2013 and 2014.
Again it seems those in the middle are being left behind and not catered for, with developers becoming increasingly concentrated at either end of the market. There are those, of course, that target the distinctly different markets but, on the whole, it would seem developers with the help of both local and national government planning policies (or lack thereof) are serving markets with either very high or markedly lower capital values than average. A big chunk of the middle market has seen a drop in activity just when it is so desperately needed.
