Unsold London Homes Under Construction Climb to Record

(Bloomberg) -- The number of unsold homes under construction in London keeps rising as new building starts continue to climb.

About 46 percent of the city’s 68,000 completed and partly built homes have yet to find a buyer, the most ever, according to a report by researcher Molior London seen by Bloomberg News. The number of homes started in the U.K. capital in the three months through June was the highest in three quarters, while sales fell 12.7 percent in the period from a year earlier. About 40 percent of the sales were to rental investors buying in bulk, the report said.

London’s housing market has been hit by a series of tax hikes on luxury homes and investors, denting demand just as developers began work on a record number of homes. That’s hurt prices for more expensive homes and left investors with growing inventories of unsold apartments.

“Banks are concerned about sales rates and the level of demand from overseas,” said James Mannix, head of residential development and investment at broker Knight Frank. “So for developers to be able to sell in bulk is attractive even if it’s at a lower price,” because it can reduce financing costs, he said.

Excluding purchases of homes for rent, sales fell by more than a third between the first and second quarter, according to the report.

Sentiment in marketing suites and selling agents’ offices across London has remained subdued, the report said. A spokesman for Molior London declined to comment.

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