What does success look like in today’s new homes market?
The goalposts have shifted - a readjustment for those that remember the heyday, when around 20,000 homes sold each year in London between 2013 and 2015. A decade later and 2024’s sales figure stood at just 7,500, according to Molior (a residential development database), a reduction of 63% versus the peak, and a further 11% decline on 2023.
While there is still a market – demand is different. A decade ago, low interest rates and high capital value growth fuelled investor activity, including global investors. Domestic buyers found borrowing more affordable relative to their income, and some were beginning to make use of the Help to Buy scheme, which gave new builds a competitive edge. Savills sales data in 2014 indicates 68% of buyers were investors; many of whom were from overseas. In more recent times, buy-to-let investment has looked less lucrative due to increasing tax and regulation, lower capital appreciation, and the spike in interest rates globally. Savills sales data in 2024 reflects this – with owner occupancy now the primary reason for purchase for both UK and overseas buyers.
Despite the more challenging environment, there are still pockets of activity, with more developers choosing to launch sites in 2024 than in 2023 (55 versus 49). Domestic buyers responded, supported by reducing mortgage rates, with almost double the level of UK-based sales in 2024 versus 2023, according to Molior. Some developments sold over 20% of their inventory (or around 1 home per week), with most of these ‘higher performing’ schemes improving their sales book on 2023, bucking the overall trend.
So where has market activity been strongest and why? Using Molior data, we’ve analysed sales volumes across all private-for-sale developments over 50 homes, which reveal some key trends amongst the ‘high performers*’:
*Defined as selling more than 20% of their homes in 2024 or over 45 homes (excludes build-to-rent homes)
Coming soon…
Schemes that sold well in 2024 were typically in the sweet spot of their development programme – in touching distance of completion. A greater proportion of the ‘high performers’ are due to complete this year versus the rest of the market. And overall, 72% of all sales in 2024 were for homes that were already complete or will complete in 2025. This aligns with the uptick in domestic buyers, who typically prefer completed homes for ease of mortgage agreements and the ability to move in straight away.
If the price is right
Another significant distinction between schemes that did sell well and the rest was pricing. The average £psf for the ‘high performers’ was just over £800 psf, versus £1,000 psf for the rest – which was the average asking price for London new build in 2024, according to Molior. Schemes that sold well were appropriately priced; two thirds of the ‘high performers’ were at a similar price to the wider market** versus almost half of the remaining schemes striving above this level. Around a third of ‘high performers’ were even offering a discount to the local market.
**less than a 10% premium to the upper quartile second hand value, according to Land Registry
Dizzy heights
Some positive news for developers grappling with numerous challenges around high-rise buildings: some are still selling in respectable volumes. Over a third of the ‘high performers’ were high-rise (20 storeys+) and delivering over 500 homes – with joint venture partnerships a common method of delivery. Major London developers are still finding some success overseas, especially in the later stages of regeneration schemes where they present a strong value proposition.
The quest for West
East London has been the hub of new build development activity, with 40% of sales in this part of town in 2024, but West London comes out as having a higher proportion of top selling schemes than the rest (28% versus 15%). Schemes such as The Verdean, Hayes Village, and The Green Quarter have benefited from the Elizabeth line bringing inner London connectivity to outer London boroughs. But schemes on the other end of the line in East such as The Aspen in Canary Wharf and Royal Arsenal Riverside have also benefited, appearing on our top sellers list.
A small outside chance
1 in 4 schemes that made our ‘high performers’ list had a number of factors in common; they were between 50 and 250 homes, priced £800psf or less, located in outer London and were completed or are due to complete this year. With mortgage rates easing from their highs of summer 2023, UK buyers have slowly re-entered the market, seeking more affordable mainstream market homes.
What falling rates and global uncertainty mean for buyers
At the time of writing, news of Trump’s tariffs is shaking confidence across the financial markets. Events which cause uncertainty usually result in more hesitation amongst those making a big financial commitment, such as purchasing property. The prime new build market, which is typically more discretionary and international in nature, is therefore more likely to be impacted. Meanwhile, the needs-based domestic market is likely to remain the key source of demand for the foreseeable future. Declining mortgage rates, following a faster-than-expected path of interest rate cuts, alongside any easing of mortgage affordability requirements, could also help boost sales in this part of the new build market.