The prime London property market is likely to remain stable for the next four years, according to the latest research report by Savills.
The increase in London’s prime (over £1,000psf) supply pipeline remains unprecedented owing to an exceptional number of construction starts between 2014 and 2016. During this time, many tower schemes, which cannot be phased, began construction meaning that nearly two units were started for every one sold.
By 2020, the level of prime stock units on the market will reach a high of nearly 700 units, 46 per cent more than the number of prime stock units currently on the market.
The average annual prime completions forecast over next 2 years is 8,500 while prime units currently under completion are 23,000. This is 40 per cent more than the number completed in 2017 and nearly 2.5 times more than the 2013-2017 5-year annual average.
However, with a fall in prime construction starts during the year to the first half of 2018 (down 47 per cent on the same period last year), Savills expect London’s prime completions pipeline to fall back in line with starts and sales from 2021 onwards, after a peak in 2020. Over this same period, it expects the starts to sales ratio to remain at a more sustainable 0.9 starts for every sale as the market rebalances.
Whilst the number of stock units is set to increase, encouragingly for the prime market, the nature of buyers has been changing considerably over recent years with more purchasers choosing to buy closer to or at practical completion