After running for almost a decade, London’s housing boom may be on its final legs.
That is the message being constantly sent by data by new building starts as well as the number of unsold homes under construction, with both metrics steadily rising over the past year.
About 46 percent of the city’s 68,000 partly built and completed homes have yet to find a buyer.
The number of new home starts in the UK capital hit the highest levels during the second quarter through June, while sales tumbled 12.7 percent compared to a year earlier with a good chunk of those sales going to rental investors who buy in bulk.
The housing market downturn is particularly pronounced in the luxury homes category. More than 1,900 of the city’s ultra-luxury apartment that were finished last year remain unsold, raising fears that London might soon become a city of posh ghost towers.
The total inventory of swanky flats equipped with private gyms, cinema rooms and swimming pools in the city has reached 3,000 units as the rich investors they were built for turn their backs on the country due to Brexit uncertainty as well as a hike in stamp duty on second homes.
High-end apartments in the city are usually priced at more than £1,500 per sq ft, which works out to a sale price of £3m for a typical 2,000-sq-ft, 3-bedroom apartment.
Meanwhile, inventories for unsold high-end apartments that are priced at between £1,000-£1,500 per sq ft have climbed to14,000. The average sale price for homes across the UK stands at a more modest £211 per sq ft.
Housing Prices on the Decline
The low demand is beginning to take a heavy toll on housing prices.
According to Halifax, Britain largest mortgage lender, house prices in London are falling at the fastest rate since the 2008 housing crash. Prices in the capital declined 3.2 percent during the first three months of the year following a 0.7-percent drop during the fourth quarter.
Interestingly, prices grew strongly in other parts of the country with east Midlands, East Anglia, Scotland and Yorkshire recording the fastest growth clips in housing prices at 7.3 percent, 7.2 percent, 6.7 percent and 6.1 percent, respectively.
The latest leg of the London housing boom was largely fueled by a construction frenzy by hundreds of Asian investors who wanted to use them as gambling chips by flipping the apartments and making big profits on the fly. But those get-rich quick schemes have been dashed and most are now scrambling to cut their losses.
Most new housing starts turned out to be too lavish, with apartments furnished with rooftop bars and priced in the £1.5m-£2m-£3m range oversupplied, while not enough affordable one-or two-bedroom apartments priced at £500,000 are available.
And luring buyers is proving to be an onerous task.
Luxury blocks lining the Thames have repeatedly...