The joint interim report by the London Housing Directors’ Group and G15 examines the barriers to housing delivery in London, particularly for affordable housing. Utilising data and analysis by Savills, it assesses the current affordability challenges in London, the expected shortfall in housing supply over the next five years, and makes recommendations for unlocking more housing delivery in the capital and facilitating the levels of affordable house building that London urgently requires.
Comment and further evidence are welcome from stakeholders to inform the final report that will be published later this year, with responses requested by Friday 17 September.
The interim report highlights the extent of market failure in London’s housing sector and the affordability challenge that has been created because of housing undersupply. The key findings are:
- Savills forecast that housing completions will average 43,000 per year over the period 2021-2025, compared to the London Plan target of 52,000 homes per year, with around 30% expected to be affordable or intermediate housing.
- According to Savills’ estimates of housing need, London requires 90,000-100,000 homes with at least 42,500 sub-market homes required in London per year. This compares to an average of 7,900 sub-market homes delivered annually since 2015/16.
- Savills’ forecast of future supply against demand shows that the largest supply shortfall over the next five years will be in the lower mainstream market segment below £450 pound per square foot (psf) and in the sub-market rent segment, demonstrating the market’s failure to deliver an adequate supply of homes that are affordable to low and middle-income households.
- London’s affordability challenge is much starker than elsewhere in the country and the need for affordable housing greater. Average house prices in the capital are 93% higher than the UK average compared to wages that are just 49% higher, with a house price to earnings ratio in London of 12.5, compared to the national average of 7.7. Based on affordability alone, Savills assess that the annual need for additional affordable housing in London is 7.6 times greater than supply, compared to 2.6 in England.
- The boroughs have seen significant increases in homelessness, in part as a consequence of increasing costs resulting from under-supply, with 24,630 households owed a homelessness relief duty by a London borough in 2019/20 compared to 10,180 homelessness acceptances in 2010/11.
Please send evidence and comments to [email protected].