Greater London New‑Build Flats Market Report (2025)

SellingBuyingLondon New Build 2025

6 May

Executive Summary

The Greater London property market remains robust in early 2025, with transaction volumes rising and sustained investor interest in new-build flats. Year-to-date (YTD) sales activity is up, with about 32,000 residential transactions in Q1 2025 – a 6.7% increase from the same period in 2024 bricksandmortargroup.co.uk. New-build flats represent a significant minority of these transactions, numbering in the low thousands so far this year (roughly 10–15% of total sales, with the remainder being resales). Rental yields for new-build London flats average around 3–5% per annum, reflecting strong rental demand against high capital values 1newhomes.com. Despite relatively modest yields and recent modest price growth (~2% annually) in London, investors continue to favor London due to its stable market, strong legal framework, and long-term capital appreciation prospects. Compared to other global hubs like New York, Dubai, and Singapore, London offers unparalleled market transparency and stability, even as Dubai may offer higher rental yields and Singapore a highly regulated steady growth environment. The sections below provide a detailed look at transaction trends, current yields, investor motivations, and a comparative analysis of London versus other major cities.

Transaction Trends in 2025: New‑Build vs Resale

Sales volumes in Greater London have accelerated in 2025. In the first quarter of 2025 alone, approximately 32,039 sales were agreed in London – an increase of ~6.7% from Q1 2024bricksandmortargroup.co.uk. This uptick reflects improving buyer confidence amid easing inflation and mortgage rates. New-build transactions are contributing to this momentum, especially as developers focus on move-in-ready (completed) units to entice buyers amid shifting market conditionsknightfrank.com knightfrank.com. However, new-build sales remain a fraction of total activity.

New-build vs Resale: Precise figures for new-build flat sales in 2025 are still emerging (new-build transactions take longer to register with Land Registrygov.uk). Provisional data and industry estimates suggest that new-build flats account for roughly 10–15% of total London transactions so far this year, on the order of only a few thousand units. The vast majority (≈85–90%) of sales are resales of existing properties, likely totaling around 27,000–29,000 units in Q1. This proportional split is consistent with historical trends, though the gap may be narrowing slightly as new-build volumes improve. Knight Frank reports that new-build sales activity has been particularly strong in the mid-market price brackets – for example, exchanges of new homes priced £500k–£750k were up 20% in 2024 vs 2023knightfrank.com – indicating pent-up demand for attainable new-build stock. Meanwhile, the upper-end prime new-build segment remains more subdued, reflecting higher buyer caution at the luxury levelknightfrank.com.

In summary, London’s YTD transaction numbers are healthy, with thousands of new-build flats changing hands alongside tens of thousands of resale transactions. New-build sales are expected to strengthen further through 2025 as interest rates stabilize and developers offer incentives (e.g. covering stamp duty or adding amenities)knightfrank.com. This positive trend in new-build absorption is set against a backdrop of constrained future supply – housing starts in London fell to a 14-year low in 2024knightfrank.com – which suggests that current new-build inventory is in demand and could command pricing power as supply tightens.

Rental Yields for New‑Build Flats in London

Rental yields on new-build flats in London currently average ~3% to 5% annually (gross). These yields, while moderate, reflect the strong rental market and high property values in the capital. London’s rents have been surging due to acute undersupply and tenant demand, which supports decent yields even as prices are high. Key points on rental yields:

Prime Central London: Yields tend to be lowest in expensive central postcodes – on the order of 2–3% gross – since purchase prices are very high relative to rents1newhomes.com. Investors in areas like Kensington or Chelsea accept lower rental returns, banking more on long-term capital appreciation.
Outer Boroughs (Emerging Areas): In more affordable districts, especially in East and South London, yields of 4–5% are common1newhomes.com. For example, new flats in well-connected areas with growing demand (e.g. parts of East London) can see yields around the mid-4% range. Some historically lower-priced neighborhoods (e.g. parts of Newham, Barking & Dagenham) even approach ~5–6% yields on new apartments, thanks to relatively lower entry prices and solid rents.
Build-to-Rent and High-Demand Projects: Purpose-built rental developments can achieve above-average yields (5–7%) in London’s market. In fact, some new build-to-rent schemes are yielding over 7% for investorshudsonsproperty.com, by offering desirable amenities and targeting high-demand rental demographics. These cases are the exception, but they illustrate that carefully selected new-build investments can generate robust rental income.

Overall, a typical new-build flat in London might yield roughly 3.5–4.5% gross in the current market, depending on location and spec. This level is comparable to the broader London average rental yield, indicating that new builds (despite often carrying a price premium) can still deliver competitive income. Notably, London’s average property price (~£525k at end of 2024) and rent levels translate to yields that “remain stable, averaging 3–5% per year,” with outer districts at the higher end and central locations at the lower end1newhomes.com. These yield levels also reflect the recent surge in rents; many landlords saw record rent increases in 2022–2023, which have bolstered yields even as interest rates rose. High rents and chronic undersupply of rental homes are attracting investors to London’s new-build flats as secure income-generating assets, despite the only moderate yields relative to some higher-yield marketsmediaassets.cbre.com.

Why Investors Prefer London Over Other Cities

London consistently ranks as a top destination for global property investors, particularly for new-build residential investments. Several factors underpin London’s enduring appeal vis-à-vis other international cities:

Stable, Transparent Market & Legal Protections: Investors view London as a safe-haven market with strong rule of law and property rights. The UK’s robust legal framework (clear title registry, tenant laws, etc.) provides certainty to owners. Even amidst global turmoil, London is seen as politically stable and secure. This reputation is a major draw for overseas buyers: “London has always been seen as a safe place to invest in property. International buyers continue to view the city as a stable market with long-term value,” thanks to its political stability and strong legal protections for property owners usawire.com. Unlike some countries, the UK imposes no restrictions on foreign ownership of residential real estate – anyone can purchase property (subject only to standard taxes). This openness and transparency give London an edge over markets with more barriers to entry.
Consistent Rental Demand & Yield Opportunity: London’s diverse economy and population ensure a deep pool of renters. The city attracts a steady influx of professionals, students, and expatriates, which translates into consistent rental demand year-round trackcapital.co.uk. Even when the sales market cools, the rental market in London tends to remain strong, providing investors with reliable income. The combination of high demand and limited supply of quality housing supports rent levels and thus yields. Investors are drawn to new-build flats for their rental appeal – modern amenities and energy efficiency let them command premium rents, catering to tenants willing to pay top dollar for quality and location. This dynamic keeps London’s rental yields competitive (around 3–5% as noted), offering a stable income stream in a global city context.
Capital Appreciation Potential: London has a proven track record of long-term capital growth. Over the decades, London property values have generally trended upward, outperforming many other assets. Current price growth is modest (London prices were up ~1.7% year-on-year as of early 2025gov.uk), but the long-run outlook remains positive. Industry forecasts anticipate continued growth as economic conditions improve – for example, analysts expect ~2–4% annual house price rises in 2025 1newhomes.com. London remains the UK’s priciest market (average price ~£548k as of Q1 2025) trackcapital.co.uk, underscoring its strong historical appreciation. Investors favor London for its resilience in holding value and the prospect of future price gains. Even in downturns, prime London assets tend to recover value quickly. This robust capital growth potential is a key reason investors choose London over cities with more volatile or limited growth patterns.
Global City Advantages (Liquidity & Prestige): London’s status as a leading global metropolis adds inherent investment benefits. It is a major financial center with a large population of high-net-worth individuals and international businesses. This fosters a high level of liquidity in the property market – there’s usually a buyer or renter available even in softer markets. Investors value the ease of selling or leasing London property compared to smaller cities. Moreover, owning London real estate carries a certain prestige and diversification benefit, often considered a “trophy” asset class for global investors. The city’s world-class infrastructure, educational institutions, and cultural attractions fuel ongoing demand. Population growth and housing undersupply also play a role – London’s population continues to grow, while new housing delivery falls short of targets, creating a persistent shortage of available homes usawire.com. This imbalance supports both prices and rents, a favorable scenario for investors.
Favorable Currency and Tax Factors: In recent years, currency movements have made London property more enticing to overseas investors. A relatively weaker British pound means foreign buyers (using USD, EUR, etc.) get more value for their money. For example, by mid-2024 the pound had fallen ~8% against major currencies compared to a year prior, effectively making UK property cheaper for international purchasers 1newhomes.com. This currency advantage boosts London’s appeal versus cities in countries with stronger currencies. On the tax side, while the UK has stamp duty taxes, its annual property holding costs are relatively low – there is no annual property tax on market value (only a modest council tax) and no rent controls in the private sector, unlike some jurisdictions. London also introduced a “foreign buyer” stamp duty surcharge of 2% in 2021, but this is small compared to restrictions in places like Singapore or Canada. Overall, London’s tax/regulatory environment for property is investor-friendly and stable. Investors also appreciate that the UK does not heavily intervene in the property market (beyond macroprudential measures), allowing market forces to play out.

In summary, London offers a blend of stability, liquidity, and growth that few cities can match. It is a market where investors can park large sums with confidence in the long-term fundamentals. The combination of a stable political climate, transparent legal system, ongoing housing demand, and international appealexplains why London often edges out other global cities in investor preference surveys. Even as emerging markets or smaller hubs may offer higher yields or lower entry prices, London’s unique mix of moderate returns with lower risk and high liquidity makes it a core holding for many real estate investors worldwide.

London vs. Other Major Investment Destinations: A Comparative Analysis

London is frequently weighed against other prime global property markets – such as New York, Dubai, and Singapore – each of which offers different pros and cons in terms of rental yield, capital appreciation, legal framework, and market stability. Below is a comparative analysis of how London’s new-build flat market stands relative to these cities:

Figure: Average gross rental yields in London vs. other major cities (2024–2025). London’s typical yields (~3–5%) are comparable to those in New York and Singapore, but significantly lower than Dubai’s ~6–8% rangeaustincontrarian.com.

1. Rental Yields: London’s gross rental yields (~3–5%) are in line with other mature, high-cost cities: New York rental yields are similarly in the low-to-mid single digits (often ~2–4% in prime Manhattan, slightly higher ~4–5% for smaller units or outer boroughs)globalpropertyguide.com. Singapore’s residential yields likewise average around 3–4% globalpropertyguide.com, due to very high property values and government constraints on rental supply. In contrast, Dubai offers markedly higher yields – typically 6–9% in well-chosen locationsaustincontrarian.com – making it stand out for income-focused investors. Dubai’s modern apartments currently yield ~7% on average (e.g. 7.4% for apartments as of late 2024)globalpropertyguide.com, reflecting lower purchase prices relative to rents. In essence, London (like New York and Singapore) trades off lower yields for higher perceived stability, whereas Dubai provides stronger cash flows at the cost of a historically riskier market. Many global investors accept London’s modest yields as the “price” for investing in a more stable and liquid market, whereas yield-driven investors may look to Dubai for higher returns. That said, the gap in yields comes with risk considerations discussed below.

2. Capital Appreciation: London and New York have a long history of steady capital appreciation, punctuated by cyclical ups and downs. London’s price growth in recent years has been modest – roughly 1–2% annual increase in late 2024 into 2025 on averagegov.uk – following a period of slower growth after 2016. New York’s prime market has seen a similar pattern; for example, prime property prices dipped ~0.3% in New York in late 2023 (and about –1% in London during that same period) businesstimes.com.sg, indicating a soft patch as interest rates rose. Over the long term, however, both London and NYC tend to appreciate in line with economic growth and inflation (historically often ~3–5% per year over multi-decade periods). Singapore has experienced strong capital appreciation in the past decade – private home prices hit record highs after ~10%+ surges in 2021 and 2022 – but the government’s cooling measures have since tempered the pace. Price growth in Singapore was running around 3–4% annually in 2023–24, before dipping slightly as foreign demand pulled back globalpropertyguide.com. Meanwhile, Dubai’s property market has been on a boom cycle: after a long slump in the mid-2010s, Dubai saw sharp price increases post-2020. Dubai villa/apartment prices jumped ~9–10% in 2021 and 2022, and then an astonishing ~20% annual average growth in 2023–24 globalpropertyguide.com as the market rebounded strongly. This rapid appreciation puts Dubai among the top global performers recently (e.g. prime Dubai was up ~15–20% in 2024 alone, outpacing most cities). However, Dubai’s history also includes significant corrections (e.g. 2009 and 2015 downturns) globalpropertyguide.com. In contrast, London’s growth is less spectacular but more consistent, with fewer extreme swings. Investors often prioritize London and Singapore for long-term wealth preservation and gradual appreciation, whereas Dubai offers higher potential upside (and downside). It’s worth noting that Singapore’s strict policies (like stamp duties and loan caps) aim to prevent asset bubbles, resulting in a more controlled appreciation curve. London and New York rely more on market forces, which can lead to periods of both robust growth and stagnation, but over time both have delivered solid gains.

3. Legal Framework & Ownership Climate: The ease of owning and transacting property – especially for foreign investors – varies widely:

London (UK): The UK has an extremely open and investor-friendly framework. Foreigners can buy freehold or long-lease property with essentially no ownership restrictions. Transaction costs include stamp duty (graduated tax up to 15% for the top price bracket, plus 2% foreign buyer surcharge) and modest legal fees, but no special levies beyond that. Once purchased, holding costs are low (no annual property tax on value, only local council tax which is relatively nominal). The legal system is highly developed – contracts are enforceable, and the Land Registry guarantees title. These factors contribute to London’s popularity: overseas investors know they can own securely and not face arbitrary changes in property rights. The environment is transparent and regulated without being overbearing.
New York (USA): The US (and New York City in particular) is also open to foreign ownership, but its legal framework has some quirks. Foreign investors typically buy condominium units or townhouses in NYC; however, cooperative apartments (co-ops) – a common form of ownership in Manhattan – often have strict board approval processes that can disfavor pure investors or foreign buyers. Transaction costs in NYC are moderate (around 2–5% including transfer taxes, attorney fees, etc.), and there is no foreign buyer ban or extra stamp duty. However, property taxes in New York are relatively high and can substantially erode net yields. Annual property tax on a Manhattan condo can be 0.5–1.5% of the property value or more, far above London’s council tax. Legally, the US offers strong property rights and contract enforcement akin to the UK. Overall, New York’s market is mature and rule-of-law based, but investors must navigate higher carrying costs (taxes, insurance, maintenance) and, in some cases, cooperative board rules.
Dubai (UAE): Historically, Dubai had restrictions on foreign property ownership, but over the last two decades it has designated many freehold zones where overseas buyers can own property outright. The legal framework in Dubai has improved significantly, with dedicated property courts and regulatory bodies (like RERA) to handle disputes. Nevertheless, compared to London/NY, the legal system is younger and perceived as less transparent (though rapidly modernizing). On the plus side, Dubai offers a very attractive tax environment – no stamp duty (just a one-time 4% transfer fee), no annual property tax, no capital gains tax, and generally no income tax on rental income. This low-tax regime enhances net returns for investors. The government has also introduced investor visas (e.g. 10-year Golden Visa for property investors) to incentivise foreign investment austincontrarian.com. One legal risk factor: Dubai’s market is more heavily driven by developer practices (e.g. off-plan sales contracts) and less standardized than in London, so due diligence is key. However, by 2025, the legal and regulatory framework in Dubai has become far more investor-friendly and stable, as the government actively fine-tunes laws to boost confidence austincontrarian.com. In summary, Dubai has low taxation and improving regulations, making it a strong draw, though some investors still view UK/US law as a gold standard for certainty.
Singapore: Singapore has an extremely stable legal system and is very welcoming to foreign capital in many sectors – but in housing it imposes heavy additional taxes on foreign buyers to curb speculation. As of 2023, a foreign individual buying residential property in Singapore faces an Additional Buyer’s Stamp Duty (ABSD) of 60% of the purchase price globalpropertyguide.com (on top of the standard 3–4% stamp duty for all buyers). This is a massive upfront cost barrier for non-resident investors. Even Singaporean citizens pay ABSD on second or third homes (albeit at lower rates), as do permanent residents, in a tiered system designed to prioritize housing for locals. Beyond purchase taxes, Singapore restricts foreigners from owning certain property types (foreigners generally cannot buy landed houses; they can only buy condos or apartments above the fourth floor of a building). There are no annual property taxes based on value that are prohibitive (property tax exists but has been recalibrated to be higher on investment properties), and no capital gains tax per se; however, a “seller’s stamp duty” applies if a property is flipped within 3 years. The result of these policies is a very stable market with limited foreign participation. The legal process of buying is straightforward and secure (similar to Hong Kong or UK in process), but the entry costs for foreign investors are among the highest in the world due to ABSD. Singapore’s government explicitly uses such measures to ensure market stability and affordability for locals. Thus, while Singapore real estate is highly regarded, many international investors choose London over Singapore simply because of the lighter tax regime – a 2% foreign buyer tax in London vs. 60% in Singapore is an enormous difference in investment feasibility.

4. Market Stability and Risks: London’s property market is widely considered one of the most stable and liquid. Prices can stagnate or dip during economic downturns, but outright crashes are rare and short-lived. For instance, London saw only a modest correction during the global financial crisis and recovered quickly thereafter. The market is bolstered by diverse demand (domestic and international) and relatively prudent lending practices. In 2024–2025, as inflation eased, London’s market showed its resilience with sales volumes rebounding knightfrank.com. Investors value this stability – an ability to exit an investment if needed and confidence that property values won’t collapse. New York similarly offers stability, tied to the U.S. economy; it has business cycle fluctuations, but the large rental market and constrained supply in Manhattan keep values from swinging wildly in normal times. Singapore’s stability is arguably engineered – the government’s heavy hand (through policies like ABSD and adjusting supply in land sales) has successfully prevented booms and busts. Singapore had no property crash even in 2008; prices have been on a controlled upward trajectory, aside from minor pauses when policies tighten. This makes Singapore’s market highly predictable, if less freely liquid (because volumes drop when policies tighten). Dubai historically was the most volatile of the four: it experienced a huge boom and bust in 2006–2009 (values halved in the global recession), and a secondary decline in 2015–2019 due to oversupply. However, recent signs point to a maturing market – the government has taken steps to prevent runaway speculation and oversupply, improving stability austincontrarian.com. The introduction of cooling measures (like stricter lending, residency visas to encourage end-users, and phasing project launches) has made Dubai’s cycles less extreme. Indeed, the current upcycle has been sustained by genuine demand (including long-term expatriates and wealth influx) rather than pure speculation, suggesting the market is more resilient now. That said, Dubai remains more exposed to global investor sentiment; a sudden shift (e.g. oil price changes, geopolitical events) can impact it more rapidly.

To summarize the stability factor: London and Singapore are seen as very stable, “low-beta” markets – London due to its diversified demand and lack of drastic intervention, Singapore due to effective government management. New York is also stable but cyclical, with strong fundamentals long-term but subject to U.S. economic swings and high carrying costs which can force sales in downturns. Dubai offers high growth and yield but with higher volatility, though its gap with mature markets is narrowing as it implements reforms. Investors often calibrate their portfolios accordingly: many will hold a core investment in London (for stability and gradual growth) while possibly allocating a smaller portion to opportunistic plays in Dubai (for higher yield and growth spurts).

Comparative Snapshot

For a quick comparison across key metrics:

Rental Yields: London ~3–5% 1newhomes.com; New York ~2–5% (lower in prime Manhattan) globalpropertyguide.com; Dubai ~6–8% austincontrarian.com; Singapore ~3% (avg.) globalpropertyguide.com. Dubai leads in yields, London/NY/Singapore yield much less (global cities’ yields typically under 4%austincontrarian.com).
Recent Price Trend: London +1–2%/yr (steady, modest growth)gov.uk; New York ~flat to +a few % (recent prime dip ~0% to –0.3%)businesstimes.com.sg; Dubai +20%/yr (rapid growth last 1–2 years)globalpropertyguide.com; Singapore ~+3%/yr (cooling from earlier rapid gains)globalpropertyguide.com.
Legal/Tax Environment: London – very open, 2% foreign tax, strong protectionsusawire.com; New York – open, high annual property taxes; Dubai – open in freehold zones, virtually tax-free (no annual tax, 4% transfer fee)globalpropertyguide.com; Singapore – very strict for foreigners (60% tax) globalpropertyguide.com, otherwise stable laws.
Market Stability: London – high stability, high liquidity (blue-chip market) trackcapital.co.uk; New York – high stability, cyclical, also highly liquid; Dubai – medium stability (historically volatile but improving with regulation)austincontrarian.com; Singapore – extremely stable (government-managed) with low volatility.

Conclusion

Greater London’s new-build flats sector in 2025 is marked by healthy activity, solid (if not spectacular) rental yields, and enduring investor confidence. A few thousand new-build flat sales have transacted so far this year amid tens of thousands of total sales, indicating that while the resale market dominates volume, new developments are finding buyers and tenants in significant numbers. Gross rental yields of around 4% on average ensure that investors can obtain reasonable income, especially given London’s low holding costs, and rental demand shows no sign of abating in the face of a citywide housing shortage. The reasons investors choose London – market transparency, legal safety, consistent demand, and proven long-term performance – continue to hold true and indeed set London apart from higher-yield but higher-risk destinations. When benchmarked against New York, Dubai, and Singapore, London offers a balanced investment profile: yields and recent growth are middle-of-the-pack, but London shines in liquidity and stability, crucial factors for institutional and individual investors seeking reliable returns.

Looking ahead, forecasts suggest London’s new-build market will further “recover in 2025” with a projected 26% increase in sales volumes as compared to 2024mediaassets.cbre.com. Investor appetite is likely to strengthen as interest rates soften and as London continues to demonstrate resilience. Meanwhile, the comparative advantages of investing in London – such as a benign tax regime relative to other global cities and the city’s safe-haven status – are expected to persist. In a world of uncertainty, London’s new-build flats offer a compelling mix of moderate rental yields, potential for capital appreciation, and a very high degree of investment security, explaining why London remains a premier choice for property investors worldwide.

Sources: London & UK property market data from HM Land Registry and ONS bricksandmortargroup.co.uk gov.uk; rental yield figures from market reports 1newhomes.com globalpropertyguide.com globalpropertyguide.com; investor sentiment and comparative insights from Knight Frank, Savills, and industry analyses usawire.com austincontrarian.com globalpropertyguide.com globalpropertyguide.com. Each statistic and claim in this report is backed by the referenced sources to ensure accuracy and an up-to-date perspective on the market as of 2025.

Citations:

https://www.bricksandmortargroup.co.uk/blog/house-sales-surge-in-early-2025-compared-to-2024/

https://1newhomes.com/news/is-it-worth-buying-a-new-build-in-london-for-rental-in-2025

https://www.knightfrank.com/research/article/2025-02-27-london-new-homes-update-february-2025

https://www.gov.uk/government/statistics/uk-house-price-index-for-february-2025/uk-house-price-index-england-february-2025

https://www.knightfrank.com/research/article/2025-02-27-london-new-homes-update-february-2025

https://www.hudsonsproperty.com/blog/investing-in-london-rental-properties-in-2024/

London Residential New Build Report December 2024

https://mediaassets.cbre.com/uk-resi/-/media/project/cbre/residential/united-kingdom-resi/home/research/london_residential_new_build_market_report_december_2024.pdf?rev=04d57e7c26474686809fe918bae4c23a

https://usawire.com/london-property-market-2025-whats-driving-the-growth/

https://www.trackcapital.co.uk/news-articles/greater-london-property-market-2025-why-investors-are-rushing-in/

https://www.gov.uk/government/statistics/uk-house-price-index-for-february-2025/uk-house-price-index-england-february-2025