No oversupply in prime London property says Savills
Their detailed analysis of London’s prime housing supply suggests a much more stable pipeline than recent reports, says the firm’s director of global research, Yolande Barnes. This assessment was made by very detailed modelling of market forces, viability and developer response.
Savills says that completions scheduled in 2013 and 14 will be much lower than some commentators have suggested because not all planning permissions will be built immediately. The modest increase in delivery that is expected will supply a market that is currently particularly low on stock, having seen very low levels of completions in the past few years. The overall volume of completions is forecast to be around 15,000 units by 2019, and similar numbers of just under 2,000 units will be delivered in each year.
Savills research team’s analysis of past take up in the prime market also indicates that there is sufficient demand for newly built houses and flats in prime London for this supply to sell out as it is built.
“The fact is the market will regulate supply levels to a much greater extent than some predict,” says Barnes. “There will be no vast overhang of stock by 2015 because developers will provide a variety of product in different locations and at different price points, tapping into different market segments.
“There is strong, worldwide appetite for all sorts of different London properties and our analysis doesn’t rely on higher rates of demand than we have already seen in London.
“Our analysis captures more early completions than other data has and puts supply in the context of demand using past sales capacity. It also anticipates that developers will adjust phasing to avoid peaks in supply. As a result, we don’t anticipate the same very high levels of completions in certain years that have been forecast this week by EC Harris, for example.”
In London as a whole, Savills foresees a severe undersupply of new housing falling well below both household formation levels and the mayor’s housing target.