New homes are right at the top of the government’s political agenda and given the continued insatiable appetite for property, 2016 is set to be a very active one from a residential development perspective. We’re not even out of January and there are already several important trends emerging.
Developers spread their wings
Whilst the land market remains buoyant, we have seen a trend of developers looking to move outwards from more established, high capital value and high value per square foot areas into neighbouring postcodes where there is greater affordability and naturally higher levels of demand.
Developers who previously focused on prime central London locations are now spreading their wings and setting their sights on residential developments in areas including Fulham, Peckham and Vauxhall. Developments recently launched, or soon to be launched, in these areas have attracted a good deal of interest from local people.
However, the majority of developers we are working with are maintaining the same or very similar levels of specification as they migrate on the proviso that they want to maintain their brand positioning and the belief that buyers will be happy to pay a premium over the local norm for a higher quality specification and finish.
New London locations
This year will also see the growth of new residential locations in London as the desperate need for new property supply means developers are looking at previously untapped locations in order to satisfy demand. The ‘North Bank’ – the oft overlooked sister of the South Bank across the river – is now experiencing an increase in residential development. And it’s a gem. With exceptional transportation links and property costing up to 40% less per square foot than at Covent Garden, just a stone’s throw away, the North Bank will soon be a mainstay of the common vernacular.
Year of the owner / occupier
Any reduction in demand from investors in 2016, due to tighter regulations around buy-to-let, is likely to benefit owner occupiers where sentiment remains strong. With interest rates likely to stay at historically low levels for the short to medium term, high levels of employment, widespread confidence in price stability and strong demand from owner occupiers, 2016 has all the hallmarks of ‘the year of the owner occupier’ and that is no bad accolade. It does however mean that agents and developers will have to alter their sales and marketing strategies to capitalise on the prevailing market conditions.
Ben Babington, Director of Residential Development