Average house prices in London are now 10 times the average salary, with homebuyers needing a deposit of more than £70,000. This picture of the capital’s housing market is contained in the new interim report from the London Housing Commission.
The report says that in the last 10 years the proportion of households who own their home with a mortgage has fallen from 39% to 27% and that house prices are now 44% above pre-crisis levels. Meanwhile rents continue to outstrip earnings with weekly pay increasing by 2% in the last five years while rents have grown by 16%.
While London needs to build 500,000 houses over the next 10 years, in the last decade only 194,000 new homes have been built. By 2030 1.5m more people need to be housed, with the need for housing growing by 50-60,000 households a year. This contrasts with the new supply of homes last year in London of just 26,000, says the report.
The interim report, published by think tank IPPR, sets out the challenges facing policymakers and housebuilders across London. Looking at a cross section of submissions from the call for evidence the report identifies the key priorities for the commission’s final report, which will be published in March.
The interim report also notes:
- 50,000 households are living in temporary accommodation – including 78,000 children
- Only 28% of London land is developed and less than 10% of London land is used for homes
- Local planning departments across England have seen an average reduction in budgets of 40%
- London boroughs in the 1970s used to build more than half of London’s homes – last year they built 280
- Public investment for new homes has fallen by some 60% per home between 2011-2015.
The commission will bring forward a strategy for the next mayor of London, including proposals to:
- Identify and release more land for the next London Plan
- Strengthen planning capacity and efficiency
- Increase building on large, stalled sites
- Unlock capacity across the whole development industry
- Provide stable and long-term investment for affordable housing
- Improve housing quality in the private rented sector, and lengthen tenancies in order to stabilise rents.
Lord Bob Kerslake, chair of London Housing Commission said: “Make no mistake – the capital is in the midst of a housing crisis but it’s of a different order to any housing crisis London has experienced in the past. Decent housing and the idea of home ownership is becoming more and more out of reach of ordinary Londoners.
“As the London Housing Commission heard in the many responses to our recent call for evidence, businesses are being detrimentally affected, as current and potential employees are priced out of taking work in the capital; public services are struggling to recruit, and low-income households are being forced out of the city by rising rents and frozen entitlements. In short, the social and economic fabric of the city is being damaged by our dysfunctional housing market.
“These issues are not insurmountable; they can be fixed. But there is no silver bullet, no single initiative, that will do it.”
The report, Capital failure – understanding the roots of London’s housing crisis, is available here.