Strong demand for London new homes in H1
Buyer registrations for new homes in the capital have been high so far this year despite the challenging backdrop.
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The new homes market in London has seen sustained levels of high buyer demand into 2022. The number of prospective buyers registering their interest in buying a new home in the capital over the first six months of 2022 was 46% higher versus H1 2021, and 83% higher than the five-year pre-pandemic average for the first six months of the year (2015-2019).
Limited supply of stock across the capital’s housing market, a flight to quality among buyers, and a push to complete sales using Help to Buy before the scheme ends, has encouraged purchasers to look at the new homes market. A spike in buyer enquiries also reflects the fact that several launches which were put on hold through 2020 and 2021 have since been brought to market.
International demand is also returning, albeit gradually. The number of international arrivals at Heathrow in June was only 17% down on the same month in 2019. Compare that to an equivalent drop of 87% last June. Regional differences remain due to varying Covid restrictions, with travel from Asia still half the level it was three years ago.
Data from Molior estimates there were 11,015 new homes sales in the first six months of 2022, up 33% year-on-year and only 5.6% below the five-year pre-pandemic average (2015-2019). On the face of it, this should be viewed positively, particularly after a relatively subdued pandemic, and it also reflects evidence from Knight Frank’s new homes teams of several well-received launches in recent months as buyers return in greater numbers to city centre locations. Largely, though, activity has been underpinned by an active Build to Rent sector, as well as through sales completed using Help to Buy before the scheme is withdrawn.
Looking to the future, the new homes market is facing the same pressures as the wider housing market where high inflation and rising mortgage costs are expected to lead to a moderation in price growth and demand later this year (as we set out in our latest forecasts). A reduction in development starts and completions could weigh on volumes for new homes specifically.
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