According to Knight Franks' Global Head of Research Liam Bailey, limited supply of stock across the capital's housing market, a flight to quality among buyers, and a push to complete sales using Help to Buy before the scheme ends, has encouraged more purchasers to look at the new homes market within London.
The number of prospective buyers registering their interest in buying a new home in the capital over the first six months of 2022 was 46% higher versus H1 2021, and 83% higher than the five-year pre-pandemic average for the first six months of the year (2015-2019). The spike in buyer enquiries also reflects the fact that several launches which were put on hold through 2020 and 2021 have since been brought to market.
International demand is also returning, albeit gradually. The number of international arrivals at Heathrow in June was only 17% down on the same month in 2019. That's compared to an equivalent drop of 87% last June. Regional differences remain due to varying Covid restrictions, with travel from Asia still half the level it was three years ago, says Knight Frank research.
The new homes market is now facing the same pressures as the wider housing market where high inflation and rising mortgage costs are expected to lead to a moderation in price growth and demand later this year. A reduction in development starts and completions could weigh on volumes for new homes specifically, concludes Knight Frank.