LONDON-International agent FPD Savills has rejected claims that the London and South East residential market is about to plunge into recession, saying that there are far bigger issues to look at.
‘What we are seeing is a tail off in the incredible rise in capital values in the region, which obviously cannot go on forever,’ says FPD Savills’ chief analyst Yolande Barnes. ‘The important thing to look at is the number of people who are finding themselves locked out of the housing market.’
Increased growth in housing prices as recorded by Nationwide, one of the country’s biggest mortgage lenders, means that up to 56% of households in Greater London can no longer afford to get on the housing ladder for property priced at £75,000 or more.
FPD Savills has looked at distribution of income per household across Greater London and, stripping out the 30% of those in social housing, means that a minimum of 800,000 people are faced with very limited household choices.
The recent housing commission, set up by London Mayor Ken Livingstone, recommended that an extra 43,000 homes will be needed every year for the next 10 years to relieve London’s housing shortage, of which 29,000 should be available annually to those on low and moderate incomes. The average income of this sector, many classified as key workers, is just under £20,000 a year.
‘Transport improvements, compulsory purchase, land pooling and long-term development finance are the fundamental issues that need to be addressed if there is any chance that housing supply in the capital is to be significantly increased,’ says Richard Donnell, director of research at FPD Savills. ‘It is very telling that even with the strong market over the last five years the supply of housing in London has barely increased at all.’