The completion of new homes in London, one of the top residential real estate markets in the world, increased significantly, owing to a combination of factors.
The most recent Molior data available indicates that new home completions in London grew 9 per cent annually to 22,848 by the end of June 2021. This was the largest completion figure for a single quarter since 2018. Meanwhile the greatest number of Help to Buy (HtB) loans was recorded in London in the year to March 31, 2021 with 6,804. Further, the tapered withdrawal of the stamp duty holiday has fostered accelerated home buying impetus.
Prime residential markets in London in particular are forecast to experience long term growth with Savills’ five year forecast indicating 21.5 and 15.9 per cent increases across inner London and outer London respectively. Property investors picked up on this significantly with a record number of prime completions at 2,160 houses by mid-2021; focused especially on large scale development schemes that incorporate contemporary market trends.
The real estate consultancy Astons expects Miami, Shanghai and London to be amongst the top global cities to experience growth uplifts of 3.5 to 5 per cent in the medium term. As it stands, Monaco is predicted to see an average real estate value of £1m in 2021, with Hong Kong (£1.3m) and London (£1m) similarly considerably higher than the average.
Build to Rent activity accounted for 40 per cent of home sales according to Savills data, whilst HtB contributed a further 30 per cent, meaning a combined 70 per cent of new homes sales between April and June 2021 can be attributed to BTR and HtB. These demand drivers have toppled the number of complete and unsold homes in London down to 3,096, 18 per cent below the 2019 peak.
The return of employees to the office, resumption of international travel, as well as progression of vaccination and the economic upturn all serve to enhance the long term outlook for the London property market, particularly the residential real estate segment. Homebuyers in England and Northern Ireland still do not have to pay any tax on the first £250,000 of the house price, instead of the usual first £125,000, until 30th September. This ongoing stamp duty incentive is proving highly impactful for home buyers across the UK.
People who buy a £500k house before the end of September will only pay 5 per cent tax on houses priced between £250,001 to £925,000. Meaning that they would pay £12.5k instead of the £15k they would pay when the stamp duty holiday ends.