Without an influx of more rental properties, increasing numbers of households will be unable to afford to live in Inner London in 10 years’ time.
That’s the claim from affordable housing charity Dolphin Living, working with special research from lettings and sales giant Savills.
London’s population is expected to exceed 10m by 2035, with a rise of 345,000 people in Inner London alone. With current supply of new homes in London only meeting 40% of estimated need, the affordability crisis is getting worse, claims Dolphin.
Even if Inner London were to deliver all identified capacity over the next 10 years, 78% of housing will be absorbed by projected household growth rather than improve affordability and mitigate the impact of the housing crisis, it suggests.
The outcome of this mismatch between need and supply will result in a 43% increase in the number of households who cannot afford to live within Inner London by 2035. Overall, 1.2m households will be priced out of London as a whole.
By 2035, some 200,000 new workers will be needed in sectors such as healthcare, education and the arts. Without new homes the capital cannot attract workers to provide crucial services, threatening the pace in which the city’s economy can grow.
According to Dolphin Living, to solve this affordability crisis, which threatens to derail the future of London’s economy, London must see the delivery of tens of thousands of new homes for sub-market rent, aimed at those median earners (household income of between £45,000-£90,000) who are not eligible for social housing yet are priced out of the housing market.
In addition to improving housing affordability for thousands of current and future workers to the Inner London jobs market, increased delivery of intermediate housing has the potential to unlock new housing schemes that are currently not viable, whilst maintaining overall levels of affordable housing delivery.
Dophin’s chief executive Olivia Harris says: “As of today 900,000 households in London cannot afford market housing that meets their needs, yet don’t qualify for social housing, with Inner London alone accounting for 200,000 of those. In ten years’ time, due to population growth, that figure is expected to increase across Inner London by 43%.”
“This means that thousands of new jobs in key sectors like health, education and tourism are likely to go unfilled as median income workers are effectively priced out of the housing market and look to live and work elsewhere. The economic impact will be most acutely felt in Inner London, given 73% of those jobs will be within Inner London.”
“However, there are solutions, but they involve a change in approach. We need to build more homes for workers on median incomes to support those who currently cannot afford housing that meets their needs as well as the hundreds of thousands of new workers. Homes for intermediate rent for workers on median incomes in Inner London should be a key focus within future housing and economic growth policy.”
And Jacqui Daly, director of Savills Research, adds: “London’s housing crisis is worsening, with those on lower incomes bearing the heaviest burden. There has been a persistent mismatch in the supply and demand of new homes in London.
“Reduced housebuilding combined with high prices is putting further pressure on already stretched resources and household budgets. Decisive government intervention is needed to support housing demand, and a step-change is essential to create a more affordable and sustainable housing market for Londoners.”