In the next 10 years £154bn is needed to meet private new housing demand in London, according to Knight Frank’s housing supply report “Bridging the Gap”.
The report highlights that despite an increase in development activity in the residential sector, and the number of new schemes under construction is at a record high, there is still set to be a shortfall in the years to come.
Examining all residential developments currently in the supply pipeline, over a period of 10 years, Knight Frank has identified that around 33,400 units will be delivered on average each year. This is up from circa 28,000 as shown in last year’s London Residential Development Report.
Such figures are a reflection of the increased activity in the market. Construction has picked up markedly over the last year in London, with a rise in planning applications seen in 2011 now filtering through to new starts. In 2013 there were 42% higher applications than in 2012, weighted towards private housing starts in the outer boroughs such as, Tower Hamlets and Barking and Dagenham.
Grainne Gilmore, Head of UK Residential Research comments:
“The average annual supply of new homes in London since 1980 has been around 16,000 a year. The city needs more than 52,000 homes a year. Activity is rising strongly, but there will still be a shortfall in the years to come.”
Among other factors, this shortfall is being driven by London’s growing population – with new forecasts indicating that it will hit 9.4 million in 2022. According to the Mayor of London, the capital’s population has risen by around one million over the last 10 years, the fastest rate of growth in the city’s history.
As part of Knight Frank’s investigation, eight of the top ten local authorities, measured by the most rapid forecast growth in population, are in London, with Tower Hamlets leading the way. The population in this area of London is set grow by 22% by 2022, according to most recent population projections from the Office for National Statistics.