London needs 50,000 new homes a year – the equivalent of 18 new Olympic Villages – to address its growing housing crisis.
According to a new report by Savills, London Demand – Housing London, the shortfall will rise by 100,000 in the next five years.
London’s current five-year pipeline equates to an average of just 28,500 new homes a year, suggesting an annual shortfall of 21,500 new homes a year or 107,500 by 2018.
Over a third (31%) of the requirement is for affordable homes and 27% for market sale, but the biggest requirement (41%) is for homes available to rent.
“Last time London’s population peaked at 8.9m in the 1930s we were building around 60,000 homes a year,” said Susan Emmett, Savills residential research director. “Back then, the city was visibly overcrowded and there were slums to clear. Today our housing crisis is not as visible, but the signs are there behind closed doors.
“Unless we are careful, the shortage of homes will start to impact on London’s ability to compete. We will start to see businesses think twice about coming to a city where they can’t afford to house their employees.”
The biggest demand (57%) comes from households on incomes of less than £50,000 a year. More than a third (37%) of demand lies in the mid and upper mainstream, with the bulk (12,500 homes) for properties with values in the £450-700 per sq ft range, equivalent to around £570,000 for a two-bedroom flat.
Further up the market, demand for new prime properties in the £1,000 to £2,000 per sq ft range represents just 6% of total demand, or just 3,000 homes a year.
Emmett added: “Land availability should not be a constraint. Residential development research company, Molior, has identified enough sites on which to build 850,000 homes. Then there’s surplus public land, industrial land and estate regeneration to consider.
“Crucially, London needs to work as one city and not 32 boroughs. We need a common vision, greater planning flexibility and a strong Mayor at the centre willing to use his powers to pull together big schemes.”