London
HOME TRUTHS 2012
The housing market in London
London
London needs a more affordable housing market London is a first-class city with a third-class housing system. If London is to stay competitive in the global economy into the future, the housing market needs renewing urgently at all levels to support an active workforce. Less than 60% of the homes London needs each year are being built.5 Consistent shortfalls in supply increase the pressures in all parts of the housing market. Last year London was the only region in England to see house prices rise. And as people were priced out of buying a home, high demand pushed private rents up a further 7%.3 More than one in 12 London families now lives in an overcrowded home and homelessness is growing fast. 5,7 The Government’s recent measures to speed up new development are welcome, but more needs to be done. The Mayor of London must use his new powers to bring together available land and investment and build the homes London’s expanding population desperately needs.
What the Government should do The Government, the Mayor and the whole housing industry need to take a long-term view, tackling the market difficulties with a joined-up approach. Addressing the lack of houses – the supply shortage – is crucial to ensure we have a healthy, sustainable, affordable housing market across all tenures (home ownership, private rent and social housing) that strengthens the economy in 2 | Home Truths 2012
HOME TRUTHS 2012 London and meets people’s aspirations rather than defeats them. Housing associations are ready and able to play their part and deliver more homes. The Government has recently put in place some welcome, important short-term measures, including a debt guarantee. But now broader, long-term solutions are needed. Housing associations could do much more if there was a ready supply of public land available to build on, if they had more certainty over rent levels after 2015 so they could raise the additional finance needed to build, and if red tape preventing them from using their homes and other assets flexibly and productively was cut.
To stem the urgent housing shortage, the National Housing Federation calls for: ■ The rapid release of publicly owned land to housing associations so they can build homes. For the quickest economic impact the Government and the Mayor must immediately release small parcels of brownfield sites, which can be delivered more quickly than larger sites. Each of these could be capable of delivering up to 100 new homes. Based on the Government’s own data, we have already identified land equivalent to two cities the size of Reading that could be built on. ■ The Government and the Mayor should provide certainty on their long-term plans for investing in new affordable homes. Currently housing associations are struggling to plan beyond 2015, when the current Home Truths 2012 | 3
London
investment programme ends. Without certainty that there will be financial support for new homes, it is too high risk for housing associations to commit to new development. The Government could create some certainty by retaining the present rental formula for housing associations until 2020, allowing them to commit to delivering new homes in the future. ■ Government must also cut red tape to allow housing associations to unleash their entrepreneurial skills. For example housing associations need more freedom to be innovative in the use of their assets and their ability to raise finance. The flexibility to take an imaginative approach would allow housing associations to build more homes. ■ We know people want more homes built, and we need to encourage their voices to be heard. Public support for more homes is vital. That’s why we’ve launched our new campaign, Yes to Homes. Visit www.yestohomes.co.uk to join the campaign.
The evidence ■ At £421,395, the average London house price is now 15.6 times the median London income of £26,962, easily the highest ratio of price to income in the country. Despite the severe recession, house prices in the capital are a third higher than in 2006.1,2 ■ Average private sector rents in London are expected to rise by 51% in the next ten years. By 2024 the average private rent in the capital will be over £500 per week.3 4 | Home Truths 2012
HOME TRUTHS 2012 ■ Almost one in four London families now rents from a private landlord – an increase of 70% in the past two years.4 ■ The number of households in London is expected to grow by an average of 36,000 every year – another 763,000 new households will need homes by 2033.5 ■ Housing associations built 14,152 new homes in London in 2011/12, 71% of all new homes completed in the capital last year.5 ■ The proportion of Londoners owning their own home is expected to fall to just 39% by 2025, compared to 50% in London today and 66% nationwide.3
Sources 1. Land Registry data, 2006 and 2011 2. Annual Survey of Hours and Earnings (ASHE), 2011 3. Housing Market Analysis for National Housing Federation, Oxford Economics, August 2012 4. Rent Watch London, Shelter, July 2012 5. CLG housing statistics, 2010, 2011 and 2012 6. Draft Revised London Housing Strategy, Mayor of London, December 2011 7. English Housing Survey 2010-11, CLG, July 2012
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London
House prices and affordability
ENGLAND LONDON Barking and Dagenham Barnet Bexley Brent Bromley Camden City of London Croydon Ealing Enfield Greenwich Hackney Hammersmith and Fulham Haringey Harrow Havering Hillingdon Hounslow Islington Kensington and Chelsea Kingston upon Thames Lambeth Lewisham Merton Newham Redbridge Richmond upon Thames Southwark Sutton Tower Hamlets Waltham Forest Wandsworth Westminster
Average (mean) house prices 2011¹
Average (median) incomes 2011²
Gross annual income needed for a mortgage (75% at 3.5x)1,
£236,518 £421,395 £180,201 £441,233 £226,056 £360,591 £335,312 £721,999 £537,559 £255,745 £374,707 £285,135 £295,431 £355,510 £635,056 £412,259 £342,518 £249,132 £288,754 £363,515 £504,853 £1,293,522 £364,242 £377,291 £267,877 £437,716 £215,171 £294,815 £570,469 £401,449 £267,115 £345,227 £240,254 £507,345 £949,098
£21,346 £26,962 £23,733 £25,912 £26,785 £21,679 £28,860 £31,902 N/A £25,298 £25,392 £24,809 £25,475 £26,390 £30,898 £24,627 £25,652 £26,619 £25,912 £24,565 £31,112 £41,662 £30,394 £28,402 £24,736 £28,278 £20,093 £24,960 £34,882 £27,742 £26,000 £28,361 £24,175 £33,961 £34,980
£50,682 £90,299 £38,615 £94,550 £48,441 £77,270 £71,853 £154,714 £115,191 £54,803 £80,294 £61,100 £63,307 £76,181 £136,083 £88,341 £73,397 £53,385 £61,876 £77,896 £108,183 £277,183 £78,052 £80,848 £57,402 £93,796 £46,108 £63,175 £122,243 £86,025 £57,239 £73,977 £51,483 £108,717 £203,378
Ratio of house prices to incomes1,2
Footnotes to tables 1. Land Registry, 2011 2. Annual Survey of Hours and Earnings, 2011 3. Homes and Communities Agency, Regulatory and Statistical Return, 2011 4. Communities and Local Government Housing Statistics Live Tables, 2011 and 2012 5. Homes and Communities Agency, Completions data, 2010/11
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11.1 15.6 7.6 17.0 8.4 16.6 11.6 22.6 N/A 10.1 14.8 11.5 11.6 13.5 20.6 16.7 13.4 9.4 11.1 14.8 16.2 31.0 12.0 13.3 10.8 15.5 10.7 11.8 16.4 14.5 10.3 12.2 9.9 14.9 27.1
Total rented housing association homes 20113
2,319,386 376,799 3,717 7,467 13,596 15,972 18,861 11,389 539 10,981 9,891 7,350 11,502 22,206 12,886 10,757 3,878 3,650 6,412 7,149 15,286 13,199 2,443 22,975 21,118 11,515 13,065 4,457 9,937 15,221 4,529 28,627 11,016 9,870 15,338
HOME TRUTHS 2012 New homes/lettings
Household characteristics
Total rented local authority homes 2011Âł
All new HA homes completed with HCA funding 2010/115
New lettings made by housing associations 2010/113
New lettings made by local authorities 2010/114
Households on waiting list 20114
Households accepted as homeless and in priority need 2011/124
Households in temporary accomodation 20124
1,725,905 417,715 19,173 11,202 13 9,115 92 23,596 430 14,024 13,060 11,482 23,404 22,772 13,113 16,623 4,991 10,129 10,479 13,490 26,328 6,922 4,841 25,612 15,526 4 17,547 5,111 0 39,845 6,409 12,502 10,365 17,328 12,187
49,196 12,179 223 332 299 451 466 207 0 621 216 502 1,295 503 38 249 285 162 329 586 87 23 80 858 477 55 564 212 40 727 219 1,145 388 177 363
176,660 20,609 191 438 974 569 844 459 16 566 373 738 967 1,326 590 400 781 216 529 590 686 623 138 1,340 1,066 457 583 147 548 942 206 1,488 528 345 945
146,388 24,841 1,366 466 0 449 0 1,045 156 904 896 637 1,630 1,200 712 645 303 655 693 833 1,174 325 327 1,842 1,128 0 800 291 0 2,364 429 791 763 1,306 711
1,837,042 366,613 12,223 16,103 6,759 14,443 6,672 17,052 1,219 7,880 12,020 6,158 6,972 13,423 7,754 18,940 3,801 6,992 6,650 12,212 11,339 6,734 7,423 23,894 16,060 6,354 32,045 9,861 4,807 12,570 4,323 23,128 16,153 5,299 9,350
50,290 12,720 199 339 346 483 634 136 17 847 423 256 185 686 203 573 109 226 116 445 413 534 176 959 567 101 248 406 255 518 168 404 600 591 561
50,430 36,740 1,085 2,214 304 3,176 612 665 12 1,749 917 1,956 235 1,313 1,025 2,944 400 526 603 741 947 1,372 497 1,221 1,089 84 2,253 2,103 259 669 254 1,796 1,307 491 1,916
Note The facts in this booklet use the latest available official government statistical sources at the time of going to print. In some areas, the National Housing Federation has carried out additional analysis to draw out the social and economic implications of the figures. The commentary is our own. Some of this data is Š Crown copyright.
Home Truths 2012 | 7
National Housing Federation Lion Court 25 Procter Street London WC1V 6NY Tel: 020 7067 1010 Email: london@housing.org.uk Website: www.housing.org.uk
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The National Housing Federation is the voice of affordable housing in England. We believe that everyone should have the home they need at a price they can afford. That’s why we represent the work of housing associations and campaign for better housing. Our members provide two and a half million homes for more than five million people. And each year they invest in a diverse range of neighbourhood projects that help create strong, vibrant communities.
The National Housing Federation runs iN business for neighbourhoods in partnership with members to promote the neighbourhood work of housing associations.