Two generations ago, the UK was about three times poorer than it is now, but was building three times as much housing.
So said David Lunts, executive director of housing and land at the GLA at a special conference run by NLA yesterday to debate how best we can take steps to house a growing city.
That growth is considerable, with official figures showing that London’s population will go beyond its 8.2 million peak in the next three to five years. Over the last 30 years it has grown by some 750,000 but in that time we have built only 500,000 homes. And now, said Lunts, with housing displacing traffic congestion as the most prominent public concern, London needs some 32-35,000 homes just to keep pace with the rate of growth before the recent census surprise, when London discovered it had 350,000 more than it had projected. ‘It looks like we will have to increase quite dramatically’, said Lunts.
‘Housebuilding is by no means keeping up with supply.’ Projections also suggest there will be many more smaller households, with 70% being 1 person households, and there will be ‘real challenges’ in affordable housing provision. Even more gloom is provided by the fact that London has the worst levels of overcrowding and there is an ‘immense’ affordability gap for first time buyers. There has also been a distinct rise in overseas buyers in prime London residential – in 2009, 75 per cent of buyers were domestic, which fell to 35 per cent last year. Mortgage lenders are not acting ‘rationally’ said Lunts, but he feels it is unlikely we will see any massive increase in lending, while citing Oxford Economics research concerning London’s fall in owner occupation to 60% and possibly 40 per cent by 2025.
So, what could be done? The GLA is setting up a single property unit to organise GLA-group land and assets and is working with the DCLG on surplus government land. Lunts said it is important to the mayor to continue to focus on difficult, large, stalled schemes, such as Berkeley’s Kidbrooke Village scheme in Greenwich and the 4,500 home Woodberry Down in Hackney. Lunts predicts that we will see equity move into residential as an institutional asset, and that new players - both investors and developers – such as Bouygues and Inter IKEA – will continue to emerge, but stressed that affordable housing needs subsidy.
Knight Frank’s head of UK residential research Gráinne Gilmore said that London stands out from the national picture, certainly in terms of prices, with the heat map showing red in the south and blue in the north, and prices in the capital 15% above where they were even before the financial crash. London is also seen as that ‘safe haven’ for international money, but there is a gap between a demand of 37,000 units per year and delivery of some 24,000 - ‘there is a real lack of structural supply’, she said. Some boroughs are running ahead of household growth, however, and London is ‘fluid’ – people will move across the capital for housing. Turley Associates’ executive director Michael Lowndes said that of the completion statistics of 24,710, (some 77 per cent of the target), 53 per cent is in outer London, suggesting a shift to the suburbs. But there was a considerable variance in the performance of planning authorities in assessing applications, and Home Builders Federation strategic planner James Stevens suggested there were further barriers to delivery such as a lack of strategic planning, a too-intrusive mayor, and viability. Stevens said the London Plan and regional local authorities fell short of the vision supplied by Abercrombie, and were in need of more ambition. But the ‘fallacy’ was that densifying the centre in line with recommendations made in the Towards an Urban Renaissance report will help us meet our needs.
The conference also heard from Stuart Corbyn, chairman of Qatari Diar Delancey, who suggested that there are the ‘beginnings of interest’ from politicians about the private rental market; Islington’s approach to affordable housing; and Peabody’s development director Claire Bennie, outlining some of its 32 live schemes. RTKL executive director Todd Lundgren, meanwhile, suggested that the private rental product should be differentiated from the homes for sale product, as they are in the US where they are in a different asset class. And finally, National Self Build Association chairman Ted Stevens suggested that so-called ‘custom building’ could provide part of the answer to the housing crisis, albeit more easily outside the capital. ‘You won’t feel more empowered than if you build your own home’, he said.
David Taylor, Editor, New London Quarterly
The NLA conference 'Housing a Growing City' was sponsored by Barratt London, Buro Four and RTKL