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One in three new homes ‘were sold in 2020 before construction was completed’
22 February 2021, 00:04
More houses are being bought off-plan, while the proportion of flats sold before completion has fallen, Hamptons said.
Around one in three new homes that were completed last year were sold off-plan – meaning they were bought before or while they were being built rather than afterwards, according to estimates.
Across England and Wales, 33% of new home completions were sold off-plan, marking the lowest proportion since 2014 when the figure was 29%, Hamptons said.
In 2019, 35% of new home completions were off-plan, it added.
The overall decline in off-plan sales masks a shifting trend of fewer flats, but more houses, being sold off-plan, Hamptons said.
However, flats are still more likely to be sold off-plan than houses.
The share of flat completions sold off-plan fell from 58% in 2019 to half (50%) in 2020, while the share of off-plan house completions increased from 29% in 2019 to 30% in 2020.
In the North East of England, four in five (80%) flat completions last year were sold off-plan while the North West also had a high proportion at 68%.
Hamptons said, most notably, nine in 10 (91%) flat completions in Newcastle-upon-Tyne last year were sold in advance, usually with a large buy-in from investors.
Historically, homes in London are the most likely to be sold off-plan – and this trend continued last year.
More than half (52%) of new homes built there last year – including both flats and houses – were snapped up by buyers before completion.
New-build homes in the South West and Yorkshire and the Humber were least likely to be sold off-plan, with just 22% of 2020 completions bought before construction finished.
David Fell, senior analyst at Hamptons, said: “Securing off-plan sales is fundamental to the health and profitability of most new developments.
“By selling some homes before they are built, developers can reduce the sales period and generate an income before the scheme is complete, often using the money to fund ongoing works and repay loans.
“While overall fewer new homes were sold off-plan last year than in 2019, there was an increase in houses sold off-plan.
“The post-pandemic ‘space race’ which has driven country markets, has also fuelled off-plan house sales. Owner-occupiers have proved increasingly likely to commit to a house off-plan, although typically this tends to be months rather than years before completion.”
The index combines new home sales data from Hamptons and the Countrywide group with Land Registry figures to make the calculations.
Here are the percentages of new home completions sold off-plan in 2020, according to Hamptons:
– London, 52%
– North West, 42%
– North East, 35%
– Wales, 34%
– West Midlands, 31%
– East Midlands, 30%
– East of England, 27%
– South East, 26%
– Yorkshire and the Humber, 22%
– South West, 22%