London needs 50,000 new homes a year– the equivalent of 18 Olympic Villages – or the capital’s economy and businesses will suffer, according to a new report.
Our population is set to grow by a million by 2021 to more than nine million. But we’re only building 28,500 new homes in London, leaving us with an annual shortfall of 21,500 homes, Savills believes.
“Unless we are careful the shortage of homes will start to impact on London’s ability to compete,” said Susan Emmett, director at Savills.
“We will start to see businesses think twice about coming to a city where they cannot afford to house their employees.”
The risk is that as Londoners will be pushed so far away from central London by escalating property prices that they will no longer be able to travel into London to work.
More than half (57%) of the housing demand in London is from households with an income of less than £50,000 a year, Savills found.
But property developers are building luxury homes priced at £1,000-£2,000 per sq ft, which are needed by only 6% of the London population.
More than a third (37%) of demand for housing is from the “mid and upper mainstream”, priced at £450-700 per sq ft range, or approximately £570,000 for a typical two bed flat.
Emmett added: “Last time London’s population peaked at 8.9 million in the 1930s we were building around 60,000 homes a year. 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.”