Central London housebuilding drops 75 per cent as house prices keep falling

Developers have put the brakes on housebuilding in central London as house prices in the capital dropped at the end of last year.

In the fourth quarter of 2016, construction started on 1,270 housing units in the centre of the city, a drop of 75 per cent as compared to the same quarter the year before, according to a report from JLL.

Read more: A fifth of Londoners think house prices will fall because of Brexit

And home sales fell 24 per cent in the final quarter of 2016, with just 1,880 transactions taking place. Prices in London have fallen 5.7 per cent year-on-year.

Neil Chegwidden, director of residential research at JLL, said: “The market remains subdued relative to the past five years with development activity slowing in response to a more challenging sales market.

“The government and the London mayor should be worried about how current conditions will impact on housing delivery.”

He said developers were dealing with “tricky decisions” over whether to start building, slow building, put off sales launches or offer discounts on homes.

House price falls have been precipitated by increases in stamp duty rates, which have “heightened concerns ahead of the EU referendum”. In the year ahead, developers will also have to navigate a squeeze on consumer spending power as inflation starts to bite.