7th August 2019

London Living - London's Housing Crisis


To paraphrase a quote from Leonardo Di Vinci ‘small dwellings focus the mind and large ones weaken it’. As the shortage of affordable quality housing in London continues to grow, perhaps one of the solutions in this week’s LondonLiving – to turn derelict buildings into micro homes, could be beneficial on many levels. Read on for more insight from Jessica Mueller, analyst at DTZ Investors.

Between 1997 and 2016, London’s population increased by c.25%. A net 1.7 million people moved to London during which time just 370,000 homes were added to the stock. The current shortfall in housing stock is only expected to worsen in the future. There have been promises on delivering over 50,000 houses each year (which would match the growth in demand). However, the planning system in London can be slow and bureaucratic, and developers have sought to carefully manage pipelines to keep prices high, which have collectively hindered delivery. Currently an average of 20,300 homes are being built each year. The rate of construction has diminished quite significantly from the 1930s, when, on average 61,460 homes were built yearly, which might be understandable given there was more space then, but even by the 1970’s, 29,420 homes were being added annually – so what can we learn from the past?

Many trends have progressed over the last decade which have caused hiccups for property developers, these vary from urbanisation, planning policy, affordability and social trends. Urbanisation has seen demand for London residential sky-rocket as people want to be more connected. Younger generations are deciding to marry and have children later, which has increased the need for single person households. However, the majority of stock in London has been built according to traditional family models, which is creating a substantial mismatch in the market. One reason behind this shift is that many young professionals want to buy a house before they have a family, which is becoming more difficult and taking longer.

As I have mentioned in a previous article, London has a large problem with affordability. The Local Authorities have tried to help by enforcing large housing developments to have an element of affordable houses in their constructions, however it has not stopped house prices increasing. There has been a flow of capital coming from overseas which has supported the top end of the market in particular. This may have fuelled economic activity, but it has only added to the problem for those who want to work and own a home in London. More people are choosing to rent, including the over 60s, who want to enjoy the London scene without the hassle of buying. On the rental side too then, it seems young professionals in London are being priced out, due to competition.

London is scattered with derelict and empty buildings, there are roughly 22,500 residential homes and 24,000 commercial buildings which have sat empty for over 6 months. Maybe this is where we should look to start to tackle the housing crisis, just the empty commercial buildings alone could create, 40,000 one bed flats (working on the basis that the average one bed flat is 46 sq m). If we create micro-homes (approx. 24 sq m) we could develop almost 75,000 flats, surely this would be the most economical and practical way of helping to resolve London’s housing issues?

Jessica Mueller


LondonLiving is a weekly thought piece looking at different aspects of life in the capital; from the logistics of deliveries, the plight of loneliness, through to how generation rent is shaping its future.

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