London housing starts sharply down in first quarter

Warranty provider the NHBC has said it is confident the construction of apartments in the UK and housebuilding in London will recover after it revealed data showing sharp falls in starts in the latest quarter.

NHBC housing starts and completions figures for the first three months of the year show that housebuilding activity overall in the UK has largely recovered from the pandemic, with both metrics up on the same period in 2020.

However, the figures showed that registrations to the NHBC – effectively starts on site – in London were down by 29% between January and March this year compared to 2020, with just 3,131 homes started.

This figure is the lowest first quarter figure reported in the capital since the depths of the global financial crisis in 2010.

In addition, the NHBC data showed that while starts on site in general had picked up quickly after initially collapsing during the first lockdown last spring, for apartment projects starts on site had continued to drop, and were lower in the first quarter of this year than in the height of the pandemic shutdown.

The NHBC said 7,022 apartments were registered in the first quarter, down 21% on the same period in 2020.

In contrast, the NHBC said registrations for semi-detached and bungalow properties were up sharply on 2020, by 30% and 37% respectively.

The figures appear to support other evidence that the housing market in the capital and the market for high density apartment projects has been most severely affected by the pandemic, with the surge in activity seen since the first lockdown largely focused on houses with private outdoor space.

Overall, the NHBC data showed starts were up 10% in the period compared to the first three months of 2020, while housing completions were up 4%. First quarter registrations were, however, 7% down on the last three months of 2020, likely reflecting market uncertainty at the start of this year in the face of the new national lockdown.

Steve Wood, NHBC chief executive, said that he expected both sales in London and sales of apartments to pick up again as young people returned to cities post lockdown restrictions lifting. He said: “Personally I think this is a short-term phenomenon, these homes are still and attractive asset class to international investors, and young people are coming back to cities.

“I think we’ll see growth in apartment registrations. Quite how quickly it comes back is hard to tell.”

Asked about the figures, Heng Leong Cheong, chief executive of Malaysian-backed resi developer EcoWorld London, which is involve in high-density schemes in Nine Elms and west London, said green space and providing facilities to work from home were increasingly important in planning their schemes. He said: “We’ve felt the effects of covid, and its been important to take a fresh look at what our customers want. But we think that market will return and people will return.

“Covid has had multiple effects, but certainly we’re optimistic registrations will come back.”

Yesterday online estate agent Zoopla published data on the rental market suggesting that the decline in rental demand in major cities seen since covid had now reversed. It found that demand in the last six weeks in cities including Edinburgh, London, Leeds and Manchester had risen compared to the previous six weeks.

However, “asking” rents remain sharply down in many cities on the same time last year.