The number of new homes breaking ground in central London has plunged by 75% year-on-year as housebuilders put planned projects on hold, and in some cases, scrap them altogether, in light of falling prices in the capital.
According to fresh data from JLL, just 1,270 residential properties were started in zones one and two in the final quarter of 2016, the lowest total for five years, as the “particularly low” figures seen in central London during the first three quarters of the year continued.
Stamp duty, in particular, continues to have a detrimental effect on the housing market in central London where properties command a price premium, resulting in a 10% levy up to £1.5m and 12% above that figure, which largely explains why fewer property transactions and lower prices are being achieved.
The number of homes changing hands in central London has been plummeting, illustrated by the 24% drop recorded in Q4 to just 1,880 transactions, while prices for newly built homes have fallen by 5.7% year-on-year, JLL found.
The decline in new construction has also led to fewer affordable homes being built under so-called section 106 agreements, which require developers to include lower cost housing in schemes in exchange for planning permission.
Neil Chegwidden, director of residential research at JLL, said: "The market remains subdued relative to the past five years with development activity slowing in response to a more challenging sales market.
“The government and the London mayor should be worried about how current conditions will impact on housing delivery.”