The jobs success and housing failure causing a crisis for the capital

roofer colourIn his speech to the Conservative Party conference the Prime Minister, David Cameron, called for a house building “crusade” to deal with the shortage of homes. Nowhere is this felt more severely than in the capital where the success in jobs growth but the failure in house building has led to a structural shortfall.

Since 2002 London has seen a 21% increase in jobs and a 16% rise in population. Over the same period new homes have increased by 10%. And the pressure on housing will continue as London’s population forecast suggests it will grow at 100,000 a year for the next decade.

Housing growth jobs

House building in the capital has been bumping along at around the 20,000 level for the past 10 years. Following the financial crisis of 2008 it dipped sharply. Most of the homes being built are in the private sector, not social housing, which raises issues about affordability.

Housing growth starts

New home starts are climbing back towards where they were 10 years ago, but it is still not enough and the problem is widely acknowledged. In his housing strategy document last year the Mayor of London, Boris Johnson, said that housing was an epic challenge and that the number of new homes being built in the capital would need to double to 42,000 per year for the next 20 years to keep pace with population growth.

The problem in London is more severe than in other comparable cities. Annualised figures for population growth and home building over the past decade show Tokyo and New York in housing surplus, while Paris has an annual shortfall but not to the same level as London

Housing growth cities-2

London relies heavily on housing stock from the last century and before, as reported by Urbs London. A quarter of the homes were built before 1900. Outer London saw a huge house-building boom in the 1920s and 30s but in recent years there has been very little increase in these areas. Figures from the Department for Communities and Local Government, reported by Urbs, show that since 2000 there has been a 11% increase in new dwellings across London (both new builds and conversions) but in 16 outer boroughs this growth is in single figures with just 4% in Sutton and 2% in Merton.

A survey carried out by the housing charity, Shelter, earlier this year showed that most people in London support the building of new homes in their area. And the number of Londoners who strongly support new building was much higher than in England as a whole.

Housing growth support

Despite the political ambition to build and the apparent public support for it, the housing shortfall that London needs to make up will mean that availability and affordability will continue to be severe problems for years to come, and the issue is likely to be a significant battleground in the election for the next Mayor in May 2016.

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See also

Living in the past: The old housing keeping a roof over our heads

More homes packed into built up inner city as growth stalls in outer areas

Booming population will struggle to find a place to live

 

Booming population will struggle to find a place to live

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London’s booming population accounted for nearly half the growth in people in the country last year. But London’s share of new homes in England was just 17%.

Data from the Department of Communities and Local Government shows that out of 136,610 news homes 23,580 were in London. The Mayor, Boris Johnson has identified the housing shortage as an “epic challenge” for London. In his Homes for London housing strategy document last year he said that London needed 42,000 new homes a year for the next 20 years.

In launching her bid to run for Mayor this week the former Labour MP, Tessa Jowell, suggested a new agency that she described as a Transport for London for housing to help tackle the housing shortage.

The lack of homes pushes up property prices and rents, as documented by Urbs, making it far more difficult for people to find affordable housing.

An examination of borough level data shows that the majority of new homes are being built in central areas. Newham leads the way with nearly 2000 new homes. In Bromley, one of London’s largest boroughs, it is just 150.

new homes map

The imbalance between inner and outer London in the provision of new homes has developed since 2000. Throughout the 20th century most new homes were developed in outer London. In recent years the contribution of outer London has fallen below 50%.

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See also:

London house prices more than 100% higher than rest of UK

Rents rise by 31% in 10 years

London drives UK population growth

Foreign property investment helps London to top of global ranking

towers and cranesLondon has come top in a global cities ranking that tracks the pace of change in the commercial property market and some underlying economic indicators.

The City Momentum Index is put together by international real estate and investment company Jones Lang Lasalle.  They used a weighted index to look at socio-economic factors like GDP and population, commercial real estate factors such as price, construction and investment, and what they call high value incubator factors like education, technology and the environment.

JLL examined 120 cities across the world.  Their top 20 includes 7 cities in China and 4 in the US, including London’s great global city rival, New York at 18th. Dublin was the only other European city to make the top 20.

The top 5 are:

  1. London, UK
  2. San Jose, USA
  3. Beijing, China, 
  4. Shenzhen, China
  5. Shanghai, China

JLL said that London achieved the top spot due to strong economic fundamentals and a high volume of commercial property investment from overseas.  Although not in the top 20, European cities including Paris, Berlin, Copenhagen and Stockholm perfomed well in education, innovation and technology.

JLL points out that the list does not indicate that the top 5 offer the best commercial property investment but shows a rapid rate of economic change and momentum in the city’s real estate market.

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See also:

NY beats London in economic power

London flies flag for West as East leads global growth ranking

Jobs growth shows changing face of work

The London jobs market has grown by 28% in 30 years. In that time London has seen a massive expansion in professional roles and the collapse of manufacturing.

commuters street copyThere are an estimated 5.3 million people working in London, up from 4.1 million in 1984. The proportion of residents to out of town commuters is not shown in the London workforce sectors data from the GLA, which covers 1984 to 2013.

In 1984 manufacturing accounted for 11% of the jobs in London and was the biggest sector of the workforce. By 2013 it was just 2% of the workforce, and had seen a fall in job numbers of 74%.

Meanwhile the expansion of the professional, scientific and technical sector has seen 500,000 new jobs created. This sector includes jobs in real estate and shows an overall growth of more than 150%. Construction in the same period grew by just 20%.

Other big growth sectors underline the changing nature of the workplace. Information and communication roles grew by 85% while admin and support jobs more than doubled.

Sectors that have shrunk include those covering the public sector, down by 21% and transport and storage, which has fallen by 12.6%.

 

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