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New trend in the London housing market: off-plan sales rate falls below half for the first time
五月 29, 2024
New trend in the London housing market: off-plan sales rate falls below half for the first time 倫敦
By   Internet
  • 城市報
  • London housing market
  • new property trends
  • mortgage rates
  • homebuilders
Abstract: A new trend has emerged in the London housing market, with the number of off-plan sales falling below half for the first time, according to the latest research.

The London property market is undergoing an unexpected shift, as research by Hamptons reveals that less than half of the new homes sold in London last year were bought off-plan, marking the first time since 2012. This phenomenon is primarily attributed to the increasing impact of higher mortgage rates on homebuyers, especially those borrowing more for their first home purchase or relocation.


Historically, off-plan sales have been the primary sales channel for most residential developers. However, with the rise in mortgage rates, purchasing a home has become more challenging for those needing loans. According to David Fell, Chief Analyst at Hamptons, this spells bad news for homebuilders, as they typically borrow to build homes and repay after selling. However, more homes now require post-completion sales, meaning developers need longer borrowing cycles and face higher rates.


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propertywire.com


As off-plan sales become increasingly difficult, property developers must take measures to protect their funds and ensure they don't end up with unsold completed properties. This includes slowing down the pace of construction to better manage funds. However, this also means that the government may struggle to meet its housing targets until rates drop and demand rises again.


Low interest rates have been a key factor driving home purchases in recent years, especially for buyers with less savings. However, higher mortgage rates pose new challenges for buyers, making it difficult for them to afford high repayment amounts. This has led many buyers to seek smaller, more affordable homes, often opting for second-hand properties. In the long run, this may affect the development and sales of new homes.


It's worth noting that since the outbreak of the pandemic, off-plan apartment sales have surpassed townhouses for the first time, indicating some shifts in market structure. This change may be attributed to shifts in housing demand and preferences, as well as concerns about future economic conditions. Therefore, understanding these changes and adjusting strategies accordingly is crucial for both developers and homebuyers.

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New trend in the London housing market: off-plan sales rate falls below half for the first time
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