Posted by Moishe Alexander
With some 1,850 new homes expected to be started in both 2009 and 2010, new home construction is expected to remain relatively stable. This is mostly due to a weak rebound of single-detached home construction,which is expected to increase by only 50 units from the 2009 level.
The weak rebound in single-detached home construction is mostly due to competition from the resale market, especially from the nearly new category (homes of 1-5 year vintage). Strong growth in new single-detached home construction before 2006 created a large stock, and some of them are being offered for sale in the resale market. These homes are very popular among doctors, nurses or other health care or natural sciences related professionals. During the past few years, they tended to purchase new from builders because the resale market was tight. However, with a larger offering of nearly new homes on the market, they tend to find what they want in the resale market. With listings of resale homes expected to remain high, these professionals will tend to purchase from resale than directly from builders.
There are reports that some builders may be building up inventories in order to better compete with the resale market, by being able to have homes ready for customers to move into as soon as the transaction closes. However, at the end of September, the level of completed and unabsorbed homes dropped to 99 units, down from nearly 200 units earlier this year.
Apartment construction will be relatively strong in 2009 and 2010. Overall apartment starts will reach 850 units in 2009, and 800 units in 2010.Many of them will continue to be in the high-end rental category. Empty nesters and retirees who like the convenience of an apartment lifestyle are the key customer group for these apartments.
Condominium apartments are also becoming a factor in the London housing market. The popularity of high-end rental apartments among empty nesters and retirees has resulted in some showing interest in ownership. Developers are beginning to build high rise condominiums to satisfy this demand.