The share of new homes sold off-plan has fallen to its lowest level since 2013, adding significant pressure to housebuilder financing costs and highlighting ongoing weakness in investor demand.
New analysis from Hamptons found that just 33% of new homes in England and Wales were sold before construction completed in 2025, down from 36% in 2024 and well below the 49% peak recorded in 2016.
The decline has been particularly severe across southern England, with London, the South West and the South East recording the sharpest falls in off-plan activity over the last decade.
Hamptons said the reduction in off-plan sales, combined with higher interest rates, has added an estimated £264.5m in additional financing costs for housebuilders compared to 10 years ago.
DEVELOPMENT FINANCE
The estate agency group estimates this equated to an extra £3,125 per new home sold in 2025, as developers were forced to carry expensive development finance for longer periods before securing buyers.
The figures are likely to concern lenders and brokers active in development finance and new-build sectors, particularly as slower sales rates continue to weigh on developer margins and viability.
Flats have driven much of the decline in off-plan activity.
While 55% of flats were still sold before completion in 2025, Hamptons said flats now account for just 22% of all new homes sold, down sharply from 38% in 2016 and 54% in 2007 as developers increasingly shift towards lower-density housing schemes.
Northern regions continued to outperform southern markets, with the North West recording the strongest off-plan flat activity. Hamptons found that 69% of flats in the region were sold before completion, ahead of London at 65%.
BUY-LET-LOSS
David Fell (main picture, inset), lead snalyst at Hamptons, said: “The share of new homes sold off-plan continued to slide last year. Over the past decade, the share of new homes sold before construction is complete has fallen by around a third.
“This partly reflects the loss of buy-to-let investors from the market, who have traditionally been the largest buyers of off-plan homes.
“However, the shift away from building flats towards houses, which are more likely to be sold after they’re finished and ready to move into, has increasingly contributed to the downward trend.”
HOUSING DELIVERY
“This move towards lower-density, house-led development is likely to make it harder for the government to significantly ramp up housing delivery.
“Housebuilders are increasingly focused on protecting margins, which has favoured faster-selling suburban schemes. By contrast, profits on slower-selling, high-density sites have been eroded, or in some cases, wiped out entirely by rising finance costs.
“In a higher inflation, higher interest rate world, off-plan sales have rarely been more valuable.
“The cash they generate allows housebuilders to pay down expensive development finance earlier and help offset the substantial upfront costs of materials and labour.
“Many of the materials needed to build new homes are highly energy-intensive, meaning their costs have risen far faster than wider inflation.”
