Report shows a shortage of affordable homes in London

Report shows a shortage of affordable homes in London

Affordable homes in London are the key to plugging the gap in the capital, according to a new report, which could well give developers a heads up on the area of the city they need to focus on improving.

The study, published this week by Savills has shown that London needs some 50,000 new homes per year in order to cope with levels of demand and to stave off the threat of a potential property bubble.

It added that around 80 per cent of these need to be aimed at a price average Londoners can afford, which would be around £700 per square foot. 

Savills said that in a city where the vast majority of people are earning less than £50,000 per year, it is vital that people are not priced out of the market by a lack of homes that fit into their price range.

At the moment, 35,000 homes are planned to be built in the capital each year, but the report states that this would leave it with a shortfall of up to 15,000 properties, a reality which can have a significant impact and see prices inflated time and again.

It was a situation that was seen towards the end of 2013, when Countrywide reported that more than ten potential buyers were looking to get their hands on every property that went on sale in the capital, indicative of a supply and demand shortfall. 

"The unassailable demand for more homes in the mainstream markets makes the case for building and investing away from the centre compelling. Now is the time for developers and institutional investors to look beyond the prime markets of central London." said Susan Emmett, Savills UK residential research director.

The company said that rising neighbourhoods and areas of regeneration are the real future for the London property market, taking development away from the pricey realities in the centre of the city and making the most of cheaper land slightly further away to help deal with the supply and demand issues that have been prevalent in recent years.