London needs at the very least 50,000 new homes a year, twice as many as we are currently building and 20,000 more than the Mayor’s minimum target, to keep pace with demand.

Failure to deliver would dent London’s competitiveness as ordinary people are priced out. The city’s economic standing depends on its ability to house those who make it tick.

The flight to prime among developers has left big gaps lower down the market. Builders must expand into more affordable areas to deliver necessary volumes. The planning system must allow the sites to come forward.

The housing shortfall

London’s population is growing faster than the rest of the country. It is expected to exceed its previous 1939 peak of 8.6 million in less than five years.

Growing demand for homes exceeds the Mayor’s minimum housing target which should be at around 50,000 new homes per annum to meet London’s needs, based on the levels of employment growth that are forecast by Oxford Economics.

Boris Johnson says that City Hall is on track to deliver 100,000 affordable homes over his two mayoral terms. So far 56,000 affordable homes have been built since the Mayor took over in 2008. There are 31,000 more in the pipeline between now and 2015. But funding for affordable housing has not been agreed beyond March 2015.

We forecast a supply gap of 115,000 homes over the next five years across all tenures, assuming that funding for affordable housing is forthcoming at current levels. In this context, the Mayor makes a resonating case for London’s stamp duty receipts to be ring-fenced, to provide affordable housing funding.

Taken from
Spotlight: London Residential Development: Where next? Feb 2013