It goes without saying that 2020 was an unusual year, and most people are pleased to see the back of it. However, London’s new homes industry managed to beat expectations.
Despite two national lockdowns during the year, 2020 saw sales stay just within the same old 20,000 to 25,000 units a year range that they have inhabited since 2013. In fact more units were sold during 2020 than 2019.
However, the more detailed picture is that deals logged during Q1 and Q3 have carried the year, while Q2 and Q4 were less good. A closer look at the numbers shows that there is more to this than a couple of lockdown-driven mini booms and busts.
Starting with the good quarters:
- Q1 2020 was in many ways similar to much of 2019: a high proportion of the sales were corporate bulk deals of one type or another. Unibail-Rodamco-Westfield’s 1,224 unit BTR start at Cherry Park in Stratford is the archetypal example and single-handedly accounted for almost a fifth of all sales logged during Q1.
- Q3 was noticeably different. Corporate bulk deals, though still significant, accounted for a reduced portion of sales in top selling schemes. BTR’s contribution fell from 38% during Q1 to just 26% in Q3. Instead, Help to Buy and the overseas market took up the slack, making a genuinely good story for sales offices at home and abroad. The sub-£500,000 stamp duty holiday was a key new motivator for many buyers.
Moving to the less good quarters:
- Nobody expected Q2 to be good given the imposition of the first national lockdown, and yet the industry still chalked-up sales totalling 3,850 units, which felt remarkably good under the circumstances.
- However, Q4 is more interesting. 4,200 sales logged across all of London’s developments is a solid enough figure but seems muted compared to 5,900 during Q3. Help to Buy and Overseas sales made a strong contribution during October and November. However, BTR only accounted for 22% of sales across the whole market, and many people have said the December was quiet from the beginning - as if the Christmas holiday had come early.
We have been told that buyer activity has picked up in the first weeks of the new-year and it is hoped that Q1 2021 will see a decent set of sales figures. The incoming Help-to-Buy rules, which restrict the incentive to first time buyers only, are still said to be good for buyers in London. However, the re-introduction of stamp duty at a time when employment prospects are depressed is a source of apprehension.
Surely, however, the greatest mass-vaccination programme in history stands to make a bigger impact in the long term than changes to stamp duty regulations or other points mentioned above. Anyone who has tried to hire a plaster or electrician recently will tell you that demand for improved homes has never been higher and it is entirely possible that London’s new homes industry stands to benefit significantly when employment prospects pick up.