More than 3,500 completed but unsold new-build homes are currently sitting on the market in London, highlighting the mounting pressure in the capital’s slowing housing sector.
While many developers are constrained by rising construction and labour costs, competing purely on price is often not feasible. However, even small gestures of added value—whether through pricing, design, or product differentiation—can sway buyers in a market where choice is more abundant than usual, according to Oliver Knight, partner and head of residential development research at Knight Frank.
“There were more than 3,500 complete and unsold units in the capital at the end of June 2025 – up from just under 3,000 in 2023 but still below the 2018 peak,” he said.
Sales rates at recent development launches clearly show how price-sensitive London’s new homes market has become,” Knight explained.
Knight commented: “The return of sub-4% fixed [mortgage] rates has encouraged many to act. On the other hand, economic uncertainty remains high. Consumer confidence is improving, yet still sits in negative territory. These conditions have made buyers particularly price-sensitive: home sellers cut asking prices marginally during July which, combined with strong supply, helped push transaction volumes to their strongest July since 2020, according to Rightmove.
“This price sensitivity is especially pronounced in London’s new homes market, where in the past two years the ability of developers to demonstrate value – whether through pricing, design, or positioning – has had a significant impact on sales rates.”
But with completions forecast to decline sharply, supply—rather than value—may become the defining factor by the end of the decade.
Knight continued: “Availability will begin falling as mortgage rates ease, boosting buying activity amid a sizable drop in new construction. In the first half of 2025, developers started fewer than 2,200 new private homes in London – just 5% of the government’s target. Meanwhile, the number of unsold homes under construction has been falling steadily for years, down from more than 30,000 in 2018 to a little over 20,000 today.
“That suggests that, while price sensitivity may be the dominant theme now, scarcity will be the story three years from now. Just 9,100 private new homes are currently scheduled to complete during 2028 and 2029, compared to a notional need for 176,000 new homes based on current delivery targets.
“Regulatory hurdles have left many developers hesitant to initiate new projects, but schemes launched in the next twelve months and completed in 2028 or 2029 will arrive into one of the most supply-constrained markets London has seen for more than a decade.”
Read the orginal article: https://propertyindustryeye.com/london-faces-glut-of-3500-unsold-new-builds-as-price-sensitivity-bites/
