Are London new builds are failing the needs of their owners? – Show House News
Not only is London not building enough homes, it is also failing to build homes that suit the changing needs of those already living within the new build sector, according to a new report from real estate adviser Savills.
The firm analysed who is buying and renting in London’s new build homes and the profile of those moving out, estimating that around 42,000 households move out of their current new build home in the capital every year.
Of these, 12,000 households move out of London, over half (6,500) to the commuter belt, and 30,000 remain within London. But of these ‘London remainers’, only one in five (6,500) move to another new build home while 23,500 (78%) choose a second hand home within the capital instead.
Savills describes these 23,000 households as a missed opportunity for the development sector in its report titled ‘The Missing Markets’, which explores why new build is not meeting the changing needs of these home movers.
“Our analysis tells us that London’s new build sector attracts genuinely local households, who tend to remain within the same geographical area when they first move into a new build home, a majority moving just a few kilometres,” says Katy Warrick, Savills residential research director.
“But as needs change and it comes to moving home, new build is not meeting their needs, even though most choose to remain in London. This a missed opportunity for the new build sector and a valuable opportunity that they cannot afford to miss out on.”
So who moves in, and who moves out? Households living in new build homes tend to be younger than those living in second hand properties, Savills found, less likely to have children and more likely to live near their place of work or study. Nearly a third of those moving out had children, double the proportion moving in, while 32% were aged 40-55, compared to just 22% of those moving in.
Budget is not the issue for those leaving the sector. Unsurprisingly, people remaining within London tend to be higher earners, particularly those moving into second hand properties. This group had average household incomes of £96,000 compared to £85,000 for retained new build customers. The former are also twice as likely to have children, at 32% compared to just 16% for those moving into new build.
Households who moved to the commuter belt had average incomes of £81,000 compared to just £56,000 for those moving beyond the commuter belt. Notably, 46% of those moving to the commuter belt had children.
What London needs
“There are many households we know like to live in new build, but as their needs change they are not finding a new build solution that suits them,” says Tom Mann, director, Savills London development consultancy team.
“Our analysis tells us that budget is not the major issue. We should be building homes with access to outdoor space, ample storage, child-friendly amenities and that cater to a diverse, evolving community.”
New development in London is overwhelmingly flats, which represented 92% of sales between 2017 and 2019, compared to 31% in Greater Manchester and 35% in Birmingham, and this is unlikely to change given density requirements to keep schemes viable. London also builds more flats over 900 square feet than other cities, meaning size is not the overarching issue.
“We often debate the design and delivery of ‘family units’ in London schemes, but we would argue that we are not delivering against family needs,” says Mann. “People in the ‘missing markets’ are likely in their late 30s through their 50s, with the means to move, but they are looking for something that is often not being built.
“Clearly there is demand for the larger, higher specification flats being built, often penthouses, particularly from wealthy downsizers, but this still leaves are large group of potential customers – 23,000 households a year at a conservative estimate – whose needs are not being met.”
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