What’s going on?
It has been reported that Battersea Power Station is re-examining its “delivery priorities with a view to easing the financial burden”. It has reportedly reached a “critical stage” and has written down its projected investment returns (IRR) from 20 per cent to 8.29 per cent. It is also moving some of the proposed affordable homes to a later phase in the scheme and is introducing a review mechanism to determine the amount of affordable housing that the scheme can viably deliver.
In light of this, LCP has analysed just released Land Registry Data on new build sales highlighting the actual picture in 2016 for Prime Central London and Inner London:
Prime Central London
- 44 per cent of all the new flat sales in 2016 took place in Q1 as buyers rushed to beat the deadline for the new additional rate Stamp Duty. This was the highest number of new build sales recorded for any previous quarter.
- However, completed sales of new build flats were down 41.4 per cent by the end of 2016, compared to the previous year
- Average prices for new builds also fell 8.7 per cent to £1.9m
- The luxury end of the market (£5m+) was worst affected with an annual fall in new build sales of 57 per cent
- In contrast, this compared with a fall in sales for PCL as a whole (old and new stock) of 29 per cent
- Unlike new build flats, PCL as a whole also saw a 3.75 per cent rise in average prices
Inner London (9 inner boroughs outside PCL)
- Overall completed sales of new build flats were down 3.9 per cent by the end of 2016, compared to the previous year
- However, a significant 29 per cent quarterly fall was recorded in Q4
- After a price surge in the first half of the year, price growth has stalled with a 2.1 per cent fall in prices by the end of 2016.
- The luxury end of the market (£5m+) was worst affected with a 51 per cent fall in new build sales
- There was also a significant 34.6 per cent fall in Q4 new build sales under £1m. This sector represents 88 per cent of all new builds in Inner London
With completed new build sales now registered for 2016, London Central Portfolio has analysed the marked effect that residential tax changes and Brexit uncertainty has had on this market. According to just released Land Registry data, new developments in Prime Central London (PCL) have been worst affected. Completed sales of new flats were down 41.4 per cent in Q4 2016 compared with the previous year, whilst average prices also fell 8.7 per cent over the same period to £1.9m.
According to LCP’s analysis, the luxury end of the PCL market saw the biggest reduction in sales. Following three successive Stamp Duty increases since 2012, a rise from 5 per cent to 15 per cent for some purchases, alongside other aggressive tax hits on foreign ownership, a significant 57% fall in new build sales over £5m was recorded.