Stock shortage fuels big rise in off-plan sales

The extreme shortage of properties for sale has fuelled the first rise in new homes sold off-plan since 2016.  

In 2021 some 37 per cent of new homes sold in England and Wales found a buyer before completion - and while still below the 47 per cent peak in 2017, it reversed the subsequent downward trend.

An analysis by Connells-owned agency Hamptons shows the rise in off-plan sales has been driven by more houses (rather than flats) being sold before completion. Some 24 per cent of new detached home completions in 2021 were sold off-plan compared to 21 per cent in 2020.  

This figure rose from 31 to 33 per cent for semi-detached properties and from 41 to 45 per cent for terraced homes.  

However, the proportion of flats sold off-plan fell from 50 to 44 per cent meaning for the first time since 2007, a terraced house was more likely to be sold off-plan than an apartment.

This shift meant that flats comprised just 37 per cent of all homes sold off-plan in 2021, down from a recent peak of 53 per cent in 2016 and a larger peak of 69 per cent in 2008. 

Hamptons says today’s off-plan purchasers are increasingly likely to be owner-occupiers seeking houses rather than flats.  This stands in contrast to pre-2016 times, and before the stamp duty surcharge on second homes was introduced, where off-plan sales were firmly driven by flats sold to investors.

David Fell, senior analyst at Hamptons, says: “The lack of second-hand homes available to buy has meant that owner-occupiers are increasingly turning to new builds, with more willing to buy off-plan in the face of limited options on the market.  

“Typically, these are chain-free homeowners who have more flexibility on moving dates.  

“Despite this, owner-occupiers don’t buy as far in advance as investors who are often happy to wait a year or two, particularly when prices are rising.  They’re also more likely to seek out bespoke, individually designed houses in smaller schemes, rather than flats in big city centre blocks.

“After nearly four years of falls, the rise in off-plan sales will provide respite for developers looking to maintain sales rates as Help to Buy winds down.  Whether this shorter-term shift has the potential to turn into a longer-term trend remains to be seen, but unlike the past, it’s owner-occupiers rather than investors who are likely to continue driving off-plan sales in 2022.”