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).
London the strongest region
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.
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