The outlook for London’s housing supply has become “increasingly worrying”, according to JLL.

The estate agency was responding to research that showed the number of new build starts and new planning applications had declined “significantly” during 2016.

During the end of 2015 there were 5,260 new-build starts across central London but in the first and second quarter of 2016 there had only been 1,840 and 1,830 respectively – a 65% slowdown.

There were 34,300 units under construction in the first quarter of 2016 but this dropped to 33,920 units in the second three months, the first quarterly fall for four years.

The number of units sent for planning in the second three months in 2016 was 48% lower than at the beginning of the year and 54% below the quarterly average.

JLL Residential Research director Neil Chegwidden said: “The slowdown in construction activity and more particularly the outlook for further development in London is of deep concern.

“We believe there are five key factors behind the slowdown in starts. The first is that the sales market was already beginning to ease during the latter half of 2015 while the second is that construction activity following the global credit crisis had to slow at some point after reaching record levels.

“The market was then stung by the 3% additional home stamp duty tax announced in November 2015 which came on the back of the Stamp Duty reform in 2014. The market was then distracted by the EU referendum.”

“This combination is having a damaging impact for housing supply right across London, most notably in central London and comes at the point when construction volumes were reaching levels that may begin to arrest London’s escalating supply crisis.”

In contrast, residential sales have improved in the second half of 2016, with demand and interest picking up since July.

Neil said: “It is encouraging that the sales market is improving but the supply situation is of deep concern.

“With both the economic and political landscapes uncertain, it is unlikely developers and housebuilders will head to new development sites en masse anytime soon.

“This should be of great concern to Mayor Of London Sadiq Khan and his team and emphasises the need for sensible, workable and long-term supply solutions.

“This was needed in any case, but these latest statistics hammer home that action is required.”

London’s deputy mayor for housing and residential development James Murray described the report as a “stark reminder” of the scale of the challenge the capital faces in building more homes.

He said: “We know that boosting the supply of new homes will take time and means all levels of government need to work with the industry to offer greater certainty and support.

“Sadiq is committed to working with the Government, London boroughs, homebuilders, developers and others to make sure we get building more new homes of all types in the capital.”

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