Lack of new homes being built in London becoming critical says new report
The housing shortage in London is reaching critical levels as house building fails to keep pace with population growth and wages lag behind housing costs, according to a new report.
Less than half of the homes needed just to house new households are currently being built, with 52,500 new households expected to form each year up to 2021 but only 18,310 new homes built during 2012/2013, says the report from the National Housing Federation.
The shortage is making housing increasingly unaffordable. The average house price in the capital is 16 times the average wage and is set to rise another 43% by 2020, the biggest jump in the country.
Suburban areas such as Brent have not escaped affordability problems, with house prices hitting nearly 17 times the average salary of £23,280. The annual income needed for the average mortgage in Brent is £90,169, the report points out.
More than 80% of businesses surveyed across the country said a lack of affordable housing is stalling economic growth, with 75% warning it would affect their ability to attract and keep workers.
The report also shows that the average house price in the capital in 2012 was £438,636, some 87% higher than the average for 2002 and the average London rent is £1,400 a month with private rents expected to rise by 32% by 2020.
‘England appears to be moving towards economic recovery, driven significantly by London’s dynamism and the city’s prominence as a global financial centre. But as the capital thrives, the result for ordinary Londoners is an overheated housing market with people struggling to buy or rent a home of their own,’ said Dave Smith, London external affairs manager for the National Housing Federation.
‘Rising housing costs are bad news for Londoners and bad news for businesses. Young people and families are struggling to afford a home in the capital and are being pushed out, away from jobs and schools. London can’t continue to be a hub for talent and enterprise if people can’t afford to live here. To retain our competitive edge on the international stage, we need housing that is affordable for people on a range of incomes,’ he explained.
‘If things don’t change, London’s much needed economic growth could be stifled and businesses could struggle. Building more homes could be the crucial difference between a thriving world city and a capital in decline. The Mayor, the Government and the London Enterprise Panel must work with housing associations and other partners to revitalise the struggling housing market, bringing with it the jobs and infrastructure that will cement our economic recovery,’ he added.