Sales of new homes in London have collapsed to an unprecedented low, with the Land Registry reporting just 26 new home sales in June. This marks a severe downturn in the capital’s housing market, raising serious concerns among property professionals and policymakers alike. The recent figures show a staggering reduction in activity in the new build sector, with London’s property market facing what many have described as a “catastrophic” situation.
The 26 sales recorded in June follow similarly disappointing numbers in the previous months: 37 new home sales in May and 29 in April. Over the three months from April to June, only 92 new homes were sold across the city, a stark contrast to the typical monthly average of around 1,000 sales. This sharp decline paints a grim picture of the current state of the housing market in London.
While it is likely that the figures will rise over time as more completions are registered with the Land Registry, experts warn that these numbers are unlikely to recover to pre-crisis levels. Even during the worst month of the pandemic, in May 2020, London saw 366 new home sales. The latest figures are a dramatic reminder of how far the market has fallen since then.
The sharp decline in new home sales is not just a trend but a reflection of the underlying pressures facing the housing sector in London. As building activity continues to slow, the availability of new homes has dwindled, while the demand for housing remains high. This has created a situation where fewer and fewer homes are being built, exacerbating the city’s already dire housing shortage.
Several boroughs in London have reported especially worrying statistics, with new home sales essentially grinding to a halt. Merton, for example, a borough with a population of around 220,000, has seen no new home sales at all this year. In Richmond upon Thames, a borough of around 200,000 residents, there has been just one new home sale — and that was in March. These figures underline the extent of the crisis in London’s housing market.
The situation in these boroughs points to a wider issue affecting the entire city. The market for new homes is simply not functioning as it should, with developers struggling to complete projects and buyers unable to secure homes. Many developers are facing challenges related to rising costs, supply chain disruptions, and increasing financial pressure.
In response to the declining new home sales, industry leaders and experts are calling for urgent intervention. The Mayor of London, Sadiq Khan, is expected to announce a series of measures aimed at boosting the capital’s housebuilding efforts. Among the proposals is a potential relaxation of the 35% affordable housing requirement for new developments to qualify for fast-track planning approval.
This change, which would temporarily reduce the threshold to 20%, has sparked significant debate. On the one hand, critics argue that it could lead to a reduction in the number of affordable homes being built. On the other hand, some see it as a necessary step to stimulate the housing market and get construction sites moving again.
One of the developers leading the charge for change is Tom Goodall, CEO of Related Argent, the company behind large regeneration projects such as Kings Cross and Brent Cross Town. Goodall has described the current state of housebuilding in London as “an outrage,” arguing that urgent action is needed to address the lack of new homes in the city.
Goodall has been a vocal advocate for a more pragmatic approach to planning and development. He believes that reducing the fast-track planning threshold for affordable housing would not only help get cranes back on the skyline but also create the conditions necessary to build more homes across the capital. This, he argues, would include affordable homes, which are desperately needed in London.
According to Goodall, lowering the affordable housing requirement is not a “gift” to developers but a recognition of the economic reality the industry is facing. The idea is to make it easier for developers to build homes, including affordable homes, by easing some of the regulatory burden. Goodall believes this approach is vital to addressing the growing housing crisis.
With rents rising and housing supply continuing to shrink, the pressure on London’s housing market has reached breaking point. The latest figures from the Land Registry are a clear indication of how the sector is struggling to meet demand. As the city’s housing stock declines, more and more people are finding themselves priced out of the market, with many left facing uncertain futures.
The impact of this crisis is being felt across the capital, with families and individuals finding it increasingly difficult to secure affordable housing. As homeownership becomes more out of reach for many, the rental market is also experiencing increased pressure. High rents, combined with a lack of available homes, are making it even harder for Londoners to find suitable accommodation.
The housing shortage in London is not a new issue, but the recent decline in new home sales has brought it into sharp focus. With developers grappling with a range of challenges, from high construction costs to changing regulations, the road to recovery looks uncertain. The lack of new home sales is a symptom of a wider crisis that requires urgent attention and action from both the public and private sectors.
As London’s housing market continues to struggle, it is clear that decisive action is needed to address the challenges facing the industry. While some of the proposed measures, such as the relaxation of affordable housing requirements, may help to stimulate development, many experts believe that more needs to be done to ensure that the capital’s housing needs are met.
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