Developers and housebuilders working in London are defying supply chain
concerns and pressing ahead with private
residential construction schemes.
Construction market analysis from Glenigan shows
that the value of private housing starts in London surged by 120% in the three
months to Q3 2021 with more than £2.1 billion-worth of work starting on site.
Glenigan’s economics director Allan Wilen
says: “This rise is partly due to a weak period 12 months earlier, which was
caused by the pandemic but the latest value of starts in London is still well
ahead of the same period two years ago.”
“The value of private housing work starting on site
in the latest quarter is also up by 31% on the third quarter of 2019, when
the London housing market was weakening, but in the short term the
prospects for private residential work look strong.”
Major private residential construction schemes
starting on site in Q3 include the £100m Manor Road development in Newham, east
London, with a consortium led by Legal & General set to deliver more than
350 new homes (Project ID: 20399119).
Glenigan’s construction market research shows that
a recovery already evident in Q2 2021 has gained pace. In the three
months to June 2021, the National House-Building Council reported that
construction started on 5,199 new homes, which is a rise of 23% on the same
period a year earlier.
While this number of starts was slightly weaker
than in the same period in the immediate pre-pandemic quarter of 2019, the Q2
2021 figure is still ahead of the same period in the three previous years.
The value of starts only rose in four other UK
regions in Q3 – the North West, Scotland the West Midlands and Wales – and the
growth registered here by Glenigan was nowhere near as strong as in the Capital.
The value of approvals is less positive with a 40%
drop compared to the same period a year earlier with only £1 billion-worth of
private residential work approved, but that total is still a 107% higher than
the figure recorded for the third quarter of 2019.
The continued strength since then was also evident in a trading
statement last month from Berkeley Group - the private housebuilder
with typically the largest exposure to the UK Capital –
which reported that: “The gradual easing of lock-down restrictions has
been accompanied by a gradual firming of the London market as anticipated.”
Berkeley’s Malt Street Regeneration in
Southwark comprising 420 homes is due to start next year
(Project ID: 20510785). This increasing confidence is
encouraging other major private residential schemes to move to
site. Glenigan’s research suggests that the first phase of British
Land’s Canada Water Dock to deliver 188 homes (Project ID: 18374937)
and the next phases of the Hale Wharf Development in Haringey will
start before Christmas (Project ID: 18290024).
A dip in the planning pipeline may produce a hiatus
but longer-term prospects for the capital look stronger.
