In its latest development briefing on Central London, JLL said the number of new build starts and the number of new planning applications had dropped significantly.
In Q4 2015, the research said there had been 5,260 unit starts across Central London. This had fallen to 1,840 in Q1 2016 and 1,830 in Q2 2016, representing a slowdown of 65%.
JLL said the stuttering performance was representative of a wider trend across Greater London as a whole and not just Central London.
The slowdown in the number of unit starts has filtered through to create a drop in the number of Central London units under construction. The number fell from 34,300 in Q1 this year to 33,920 in Q2, the first quarterly drop recorded in four years.
Neil Chegwidden, director of research at JLL, said: “It is true to say that the number of starts was beginning to ease slightly towards the end of 2015, but the new additional home Stamp Duty charge and the Brexit decision look set to reverse all the good work of the past few years. The 2014 Stamp Duty reform has also impacted higher priced property and locations.”
He added: “This should make shocking reading for London Mayor Sadiq Khan and indeed for Prime Minister Theresa May. Given the uncertainty following the EU referendum, and despite recent indications that the initial economic impact from Brexit might be more benign than many assumed, developers and housebuilders are unlikely to be heading to new building sites with huge enthusiasm and gusto in the immediate future.”
Andrew Montlake (pictured), director at mortgage broker Coreco, said: “Any time there is a slowdown in the number of units becoming available, it causes more problems in the relationship between supply and demand and so what you’d expect is that less supply will see prices staying at high levels.”
Communities secretary Sajid Javid and Chancellor Philip Hammond are expected to reveal plans later today which will see the government set aside £2bn for housebuilding and roll out a £3bn fund to provide loans to small housebuilders, an initiative originally announced by former chancellor George Osborne during his March Budget.
Montlake added: “There is a lot of pressure on the Chancellor to do something – I know he is talking about investing significant sums in the housing market and a lot will be down to him to see if he can kick-start things. Housing will be a major part of his policies going forward.”