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Housebuilding rebounds in London despite Brexit but still falls short of target

The approval of new homes in the capital rebounded in the run up to the EU referendum in June according to Stirling Ackroyd’s quarterly survey of house building in London.

According the property firm’s latest report, 6,310 new homes were approved in Q2 of this year out of a possible 8,280 homes that could have been approved.

Representing a 76% approval, the number is an improvement on the 61% approval rate in Q1 and hints that the number of new homes was rebounding just before June’s Brexit vote.

Andrew Bridges, managing director of Stirling Ackroyd, believes that the figures are a sign of how robust the capital’s property market might be, although he warned that the full effects of Brexit would not be known for some time yet.

He said: “London has had a tough time lately, as Brexit injected a dose of uncertainty into the property market. In spite of this, the number of new home approvals improved in the run up to the result.

“There may still be an impact to come but for now, this pickup is a sign that London’s property market is resilient. It’s a new game of unknowns – and London could emerge a winner.”

Out of all London’s boroughs,Westminster had the most liberal approach to housing approvals, green lighting 99% of all housing developments that were proposed equating to 1,720 new homes.

On the other hand, Newham rejected the vast majority of new housing proposals, knocking back 92% meaning the borough saw only 9 new homes approved in Q2.

With Tower Hamlets (87%), Barking (80%) and Havering (87%) all proving proactive in their approach to new house building, Andrew believes that East London is shaping up to be the most reliable area when it comes to tackling London’s housing crisis.

He added: “Planning is more lenient, there’s less resistance to new developments and the area keeps growing in vibrancy and significance to the London economy. East London’s impressive tech sector is just a starting point – and success will continue to ripple around the surrounding locales.

“More and more, people are wanting to live in Shoreditch, Dalston and Hackney Wick – and this enthusiasm is driving developers to the area.”

Of course, even with the boost in new home approvals the numbers still fall significantly short of the 50,000 new homes required every year to meet the current shortage across the capital, and is almost 2,000 less than the number approved in the same quarter last year.

In a separate development on Friday that underlines the volatility that last month’s referendum has unleashed in the property market, London estate agents Foxtons announced a 42% drop in profits, down to £10.5m, which it attributed directly to the ongoing Brexit uncertainty.

Blaming a ‘sharp contraction’ in the London property market following the EU referendum, the estate agents warned of a period of ‘prolonged uncertainty’ with markets showing little hope of rebounding until the end of the year at the earliest.