Wednesday, July 11, 2012

London could face housing crunch

London could see a supply shortfall of at least 37,000 homes over the next five years, or a high of 50,000 if the number of new affordable housing projects are not increased, according to a Savills Research report.

The shortfall is due to possible limitations which could pull net market completions down to an average of only 13,300 per annum in the next five years, or 35 percent below the minimum target set by the city’s Mayor.

Currently, housing supply in London is one-third below the Mayor’s minimum target, which is at the lower end of estimates for future housing requirements, taking into consideration the city’s growing population.

“We have reviewed the prospects for development and phasing of 2,250 sites across London, with a capacity of 500,000 units for market sale. We expect 600 of these sites to deliver new homes over the next five years, with around one-third of their total capacity of 137,000 homes being delivered by 2017,” said Savills.

The report added that more than half of the supply pipeline will be located on sites with a capacity of over 500 units. This concentration of supply controls sales volumes, “as does the economic viability of many of these sites which require significant investment of scarce development finance”.

To close the supply gap, the city must release extra market capacity via the private rental market and draw extra investment into large development schemes.

The supply of affordable homes fell around 30 percent below the target of 10,000 new homes yearly, net of demolitions and acquisitions.

“Local authorities will have a crucial role in closing the gap, using their new financial freedoms and their own land holdings,” said Savills.

View the original article here

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