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.
Our latest analysis from our first Off-Plan Sales Index shows that 33% of new home completions in England and Wales last year were sold off-plan, equating to 49,000 new homes. Off-plan sales are those bought before or during construction, prior to completion.
The share of new homes in England and Wales sold off-plan has been steadily falling since its peak in 2016, when 39% (69,000) of new homes completed were sold off-plan. In 2020, the proportion of off-plan sales reached the lowest share since 2014, also down from 35% (58,000) in 2019).
While the proportion of new homes sold off-plan in England and Wales fell overall, the figures mask a shift which saw fewer flats, but more 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 this tends to be months rather than years before it is built.
The share of flat completions sold off-plan fell from 58% in 2019 to 50% in 2020, while the share of off-plan house completions rose from 29% in 2019 to 30% in 2020. However, flats have consistently remained more likely to be sold off-plan than houses.
Historically London sees more new homes sold off-plan than anywhere else in the country and 2020 was no different. Over half of new homes (52%) which completed in the capital last year were sold in advance of completion. Flats accounted for between 90% to 95% of total new home sales in London, meaning the capital saw a higher share of homes sold off plan.
New build homes in the South West and Yorkshire & Humber were least likely to be sold off-plan, with just 22% of 2020 completions bought before the end of construction. This low figure is driven by flats comprising a small share new homes.
Last year there were more flats sold off-plan in Northern England than anywhere else in England and Wales. In the North East four in five (80%) of flat completions last year were sold off-plan, while in the North West the comparable figure was 68%. Most notably 91% of flat completions in Newcastle last year were sold in advance, usually with a large buy in from investors. By comparison, just 37% of flats completing in the South East last year were sold off-plan.