Leading indicator of London new home builds slumps by a third
LONDON – The number of new homes built in London fell 6 percent last year and a closely watched indicator of future supply dropped by a third, industry data showed on Friday, as the Brexit vote hit a market already coming off record highs.
Registrations with the National House-Building Council (NHBC), when a builder pays to take out a warranty on a home about to be constructed, dropped 33 percent to 17,322 units in 2016 compared to a near record in 2015.
NHBC statistics account for around 80 percent of the market and are a leading indicator as it can take years for registrations to feed into the number of completed homes.
Business Development Director Mark Jones said several factors were at play in the London market such as “the timings of the registrations and the build coming through including the impact of Brexit in those early months.”
Registrations in the capital rose marginally in the first four months of 2016 but then slumped by over 60 percent in the run-up to the June 23 Brexit vote and its immediate aftermath between May and July.
Britain’s biggest builder Barratt built nearly 60 percent fewer homes in the second half of 2016 in London, saying the rising cost of land over recent years had priced it out of the market.
It has also cut the price of top-end homes in central London by up to 10 percent, as a hike in stamp duty property tax on second homes and buy-to-let properties has pushed down prices and made the city centre less attractive to buyers and builders.
The number of new homes built in London last year fell by 6 percent to 21,464 units and rose nationwide by just over 0.5 percent to 141,175 units, far fewer than the government would have wanted in its bid to boost supply to deal with a chronic shortage.
Several housebuilders are also concerned that future growth could be hit by any Brexit-imposed curbs on the number of Europeans coming to Britain, who make up the majority of workers on some London building sites.
Prime Minister Theresa May has said she will control immigration in response to the Brexit vote but has yet to set out specific details, prompting several sectors reliant on foreign labour to make their case to government.
“Our lobbying is all about ensuring that we are at the top of the agenda when it comes to immigrant labour,” said Peter Andrew, deputy chairman of the Home Builders Federation. “If we’re to get the increases in output that the government is looking for, we are going to need the labour we’ve got now plus the labour required to build the increases,” he said. -Reuters