With the recent revision of GDP growth in Q2 to 0.7% it seems that recovery in the national economy has begun, with growing activity in the consumer and housing sectors.
London’s labour market is expected to continue showing strength, and forecast annual employment growth of above 1% over the next five years means that London will account for one in every four new jobs created in the UK. This will also support domestic demand for residential property in the capital.
Prices continue to rise in all areas. Despite a slowdown in price growth at the end of 2012 average prices in Westminster and Kensington & Chelsea, the key boroughs for foreign sales, have accelerated, by 5.8% and 7.4% respectively since the beginning of the year. In addition stronger growth in other London boroughs indicates that domestic interest also remains strong.
Development activity declined in the period after 2009, but strong demand has caused a strong recovery in activity, with development under construction rising from a low of 6,500 at the end of 2009 to 17,800 in Inner London as of end August 2013. Not surprisingly a rising level of completions has followed; from 4,200 in 2011 to a projected 11,900 units in 2013.
The 2000s saw a steady increase in the planning permission pipeline for private residential units. This fell back in 2012 but momentum has been restored in 2013. The total number of consented units rose 30%, from 40,000 units to 52,000 by August 2013.
The residential pipeline, if fully implemented, will add significantly to private housing stock in Inner London, especially Hackney and Tower Hamlets. Two major sources of redevelopment sites dominate: conversion of non-residential land (e.g. Earl’s Court, King’s Cross, Nine Elms) and redevelopment of social housing estates to mixed tenures in significantly higher densities than before (e.g. Woodberry Down, The Heygate).
Source : DTZ (Groupe UGL)