Quarter of households in London unable to buy home

Click to follow
The Independent Online

More than 800,000 people have been locked out of the London housing market by spiralling prices and a dwindling stock of council homes, according to one of the capital's leading estate agents.

FPD Savills yesterday published what it said was the first piece of extensive research into the scale of the property crisis in the metropolis.

Using data on the distribution of household income across London together with the latest house price figures, it calculated that 56 per cent of households in Greater London could no longer afford to get on the property ladder by buying a £75,000 home. Excluding the 30 per cent of households who qualify for council or social housing, this left a quarter of all households, or 800,000 people, unable to buy a home.

Savills said those worst affected were people on moderate incomes, which included "key workers" – teachers, police officers and health workers.

When the data was applied to a house price of £150,000 – closer to the average £160,000 cost of a London home – more than half of those not in council accommodation had been priced out of the market.

Savills said many London households were already on the property ladder and would have gained stronger buying power from recent price rises.

Richard Donnell, director of research at Savills, said: "First-time buyers with little equity or those just above the housing benefit threshold will be faced with real problems."

The issue has been taken up Ken Livingstone, the Mayor of London, who is currently consulting on whether to set a target of 50 per cent of new-build homes at affordable prices.

Last week the Mayor published independent research showing that 50 per cent was an achievable target and called for extra public subsidy. It found that in eight of the 36 boroughs the target was achievable if public money was used to offset high land prices, while in a further six it could met even without the use of Treasury cash.

Meanwhile the Mayor's Housing Commission recommended an extra 43,000 homes were needed every year for the decade, of which 29,000 should be affordable.

But Pierre Williams, of the House Builders Federation, said: "The problem with Ken Livingstone's call for a blanket 50 per cent is that it would reduce stop local councils having the bargaining power to negotiate the best deal with developers." Mr Donnell said this would involve a trebling of the current building programme, which was "not realistic".

Comments