A report launching this week sets out to make some sense of London’s housing crisis and identify ways of ensuring that getting on the property ladder does not remain an impossible dream for all but the highest earners in the capital.
Pricing Londoners in, not out: mapping where new affordable homes in London could be built takes an in-depth look at complexities and variations in land values, property prices and tenure mix in boroughs across London, highlighting areas offering comparatively affordable properties and the greatest scope for delivering large volumes of new homes within budgetary constraints.
Notably, the report shines a spotlight on boroughs such as Barking and Dagenham as offering affordability and good potential for delivering new homes across a wide range of tenures. The outer London borough has a high proportion of properties suitable for families and the average home costs £265,000, in stark contrast to the most expensive borough, Kensington and Chelsea, where the average price is over £2.3 million.
The lower levels of subsidy required to buy and build on land in Barking and Dagenham also suggest that 12 homes could be delivered in the borough at the same price required to build just one in Westminster.
Pricing Londoners in, which was written by the Smith Institute and sponsored by Genesis Housing Association, also uses affordability assessments to identify where homes are within the reach of potential buyers dependent on their circumstances.
It indicates that there are six boroughs where a joint household income of £50,000 would be enough to afford a median priced home, and one where only £30,000 is required. However, applying the same measures also suggests that households earning less than £40,000 would be priced out of buying an average (mean) home in any of the capital’s boroughs. Meanwhile, first-time buyers with children face significant barriers to homeownership in London, even if their earnings top £80,000 a year.
The researchers recommend that a London-wide housing plan needs to focus on pricing Londoners into areas which create mixed communities and offer best value for money. This will require close collaboration between London boroughs, and some difficult discussions about where investment might best be targeted.
Paul Hackett, Director at the Smith Institute, said: “We need to rethink how best to tackle London’s housing crisis so we can get the best deal we can from the limited funds available. That means recognising that not only is London a mesh of different housing markets with very different levels of affordability and mixed tenures, but that investing in lower cost housing areas (especially outer London) offers a much greater economic and social return. The Mayor needs to work with the boroughs to share resources to ensure that we narrow the divide between London’s housing haves and housing have-nots.”
Neil Hadden, Chief Executive of Genesis Housing Association, said: “With housing top of Sadiq Khan’s priority list, there is no better time to explore how best to deliver affordable homes with a mix of tenures at the high volumes that are so desperately required in the capital.
“Housing associations have a central role to play in tackling London’s housing crisis, but these financially difficult times demand new ways of thinking and city-wide collaboration to price Londoners back onto the property ladder. We’re delighted to sponsor this excellent and comprehensive report, which offers policy makers useful food for thought on how the crisis can be tackled most effectively.”