London house prices: More than 35,000 high-end homes planned in next decade – just as the prime property market starts to falter
London's prime residential market is already suffering from the early signs of a slowdown but a flood of new properties is coming in the next decade that could exacerbate it further.
A new report out today suggests there are 35,000 prime London homes due for construction in the next 10 years – a 40 per cent increase from the amount estimated in 2014 – worth a total of £77bn. The total combined floor space of these properties "would eclipse the entire Canada", according to report author and head of commercial development at Arcadis Mark Cleverly.
The number of new-build apartments or houses coming to market is expected to peak in 2017 and 2018, the report suggests.
While first-time buyers are crying out for affordable homes to help get them on the housing ladder, these properties are likely to be anything but: Chelsea and Fulham will become home to the lion's share of new residential properties (10,914), worth an estimated £20bn, followed by Southbank (8,863 – worth £14.2bn) and City & Fringe (5,898 – worth £7.3bn).
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"This growth comes at a time when development costs are on the rise and the global economic slowdown is seeing buyer demand ease," Cleverly noted, adding that developers may change tactic and convert their residential buildings "to target the more buoyant office and commercial markets".
"Furthermore, less costly locations such as the north of England and the West Midlands could also begin to attract greater investor attention as London costs continue to squeeze margins," he added.
Already developers in pockets of London have been forced to cut prices of luxury schemes, most notably in Nine Elms, where as much as £2m has been knocked off asking prices.
Meanwhile figures out today show that a third of people trying to sell homes in some boroughs have had to cut their asking prices. Three guesses for which borough tops that list.