Three months can be a long time for London’s residential development industry and the first quarter of 2021 was no exception.
On the surface the overall numbers for Q1 2021 paint a fairly black and white picture - with more black than white:
- Developments priced and timed to get maximum benefit from the Help to Buy and temporary Stamp Duty incentives sold well during the quarter.
- The rest have not done so well.
- Furthermore, bulk deals, Build to Rent (BTR) starts and big launches (overseas or at home) have all been relatively scarce meaning that sales numbers generated by standard sales offices have not been quite so bolstered in the way they normally are.
So, the net result is that fewer new homes sold in London during Q1 2021 than in any quarter since 2012.
This is mirrored on the construction side, and you would have to go back to 2011 to find such a low number of quarterly construction starts.
The fall in sales and construction starts may be disappointing but will not come as a surprise to most developers, some of whom have said words to the effect that:
- January was a time of apprehension - nobody was quite sure what the New Year would throw out.
- February did little to help - the cheaper end of the market was doing well, but nobody had concrete evidence that things were going to get better elsewhere.
However, Boris’s announcement on 22 February of a timetable for the easing of restrictions, twinned with excellent data from the vaccination programme, paved the way for renewed confidence during March. That said, enthusiasm from both buyers and developers is tempered by the experiences of the last winter, as well as the realisation that pre-COVID challenges have not gone away. So, whilst nobody is expecting the same bounce in sales seen at the end of lockdown one in June 2020, sentiment is much improved.