Housing starts in London fallen by nearly 50% in 6 months

Over the past six months building started on 35 developments that propose to deliver 3,700 new homes in London. This  is nearly half the number of new homes on which building was started in the previous six months, according to the London Residential Crane Survey  by DJD.

There has been a "sharp decline" in the number of new housing developments starting in the past six months, the report said. "Only 35 new schemes have been recorded since the last survey six months ago, a significant fall from the 81 new schemes this time last year and 55 six months ago," it said.

Of the new homes on which building has begun in the past six months there is a focus on the inner London boroughs, which accounted for around 75% of the new homes underway. Inner London boroughs will deliver 52% of the total units currently under construction, the survey said.

Many schemes are due to complete soon, despite the fact that activity in London is slowing down. This is due to the large number of developments on which building was started 28 to 24 months ago.

“While schemes started in the more buoyant 2010/11 period are now progressing through to delivery, meaning current completion levels are looking more healthy, this latest research shows a clear decline in the number of new schemes starting," said Anthony Duggan, head of research at DJD.  

"While it is too early to call this slowdown in new activity a clear trend it does reflect the unease in the wider London residential market," he said.

Developers are not building residential developments evenly across London and the most popular area for construction is in east London, which accounted for 30% of the total number of homes currently under construction.

Developments in south west London increased the most over the past six months, compared to the rest of London, with the construction of new homes rising by 8.5%. Construction on new housing developments in west London also rose moderately, the survey said.

However, the has been a "sizeable fall" in the number of housing projects under construction in both the south east and north of London.

“London remains a two-tier market with developers continuing to focus on the Inner London boroughs," said Mathew Evans-Pollard, head of London development at DJD. There appears to be a resurgence in west and south west London as a number of larger schemes have broken ground."

The number of new houses being built, as opposed to flats, has fallen to 5% over the last 6 months, compared to more than 25% 10 years ago. However, the survey also revealed that the building of both private and affordable homes had been "fairly balanced" over the past six months, which is in contrast to previous surveys, the survey said.

“The slowdown in new starts is unlikely to impact the market in the short term with 2012 and 2013 having a large volume of committed construction activity," said Duggan. "Indeed, completions are expected to increase from their 2011 low in 2012.

However, if the volume of starts remains low over the next survey period, as we suspect it might, the recovery in completion levels may be relatively short-lived as the lack of new schemes starts to bite,” he said.