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London new home starts surge 42% as builders ignore Brexit woes

[LONDON] London home starts rose to the highest in 18 months even as the number of unsold properties under construction climbed amid uncertainty surrounding Brexit.

Construction began on 6,962 units during the second quarter, according to a report by Molior London seen by Bloomberg News. That's 42 per cent higher than a year earlier and the most since the fourth quarter of 2015. A spokesman for Molior declined to comment.

Based on current transaction rates, it will take 1.2 years to sell the properties that have yet to find a buyer, according to Molior.

Purchases of homes under construction in the second quarter climbed 30 percent from a year earlier to 5,813 units and the stock of unsold homes being built reached 26,573 units, the highest since Molior began collecting the data in 2009.

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Increases in home values and transactions sales have slowed this year as Brexit clouds the UK's economic outlook and increased sales taxes and the prospect of higher interest rates hurt demand for homes.

Asking prices for homes in the British capital fell 0.5 per cent in May, from April, the latest available data from LSL Acadata House Price Index shows.

The number of new homes built in London will reach record levels in 2017 and more homes will remain unsold after completion than at any time over the past decade, broker Savills Plc said in April.