The number of properties being built or completed that have yet to find a buyer surged to 27,000 units from about 25,000 at the end of last year, according to a report by Molior London. It is the highest level since the researcher began compiling data in 2009. Based on sales rates, it will take just over a year to sell the properties that have yet to find a buyer, according to Molior.
Purchases of homes under construction fell almost 8% to 5,470 units from a year earlier. Near-record prices, higher sales taxes and uncertainty surrounding the terms of Brexit have hurt demand for homes in London. Asking prices for homes in the British capital posted their largest drop in almost eight years in April, according to data from property website Rightmove. The number of new homes built in London will reach record levels in 2017 and more homes will remain unsold after completion this year than at any time over the past decade, broker Savills said earlier this month.
Meanwhile, European investors who shunned London’s commercial property in the run-up to the Brexit referendum are flocking back as the weak pound cuts prices and electoral uncertainty on the continent makes the UK seem a good place for buyers to spread their bets. Investors from Europe ploughed £1.7bn (€2bn) into the capital’s offices, shops and warehouses this year through mid-April, accounting for almost a third of the market, according to Savills.
The figures are up from £824m and 14% in the same period of 2016. Many investors have already resigned themselves to the UK quitting not just the EU but also its single market, and have made contingency plans to soften the blow.
“If anything, the snap election call in the UK decreases uncertainty regarding property values in London. If, as expected, May comes out stronger and in a better position to negotiate with the EU, our Brexit will be softer,” said David Hutchings, head of European strategy for property broker Cushman and Wakefield.