Sharp fall in London housebuilding over last 12 months, new research reveals

There has been a sharp fall in housebuilding within London, new research from The Housing & Finance Institute reveals today.

For the first time in five years, there are more homes being built in the home counties than in the capital.

The Institute says this looks like being part of a longer-term trend of London being increasingly outgunned by the rest of the country – and not because of the Brexit vote in June 2016.

The analysis shows that Sadiq Khan is right to put a firm focus on housing in London, but also that his team will have their work cut out to regain momentum and keep the capital building the homes required.

Official figures just released show that around 16,800 new homes were started in London in the year to March 2017. This was down sharply from nearly 23,000 homes the year before.

By contrast, the Home Counties areas started over 24,300 new homes in the year to March 2017. This was a strong rise on around 21,500 new homes started the year before.

In addition, England as a whole saw nearly 163,000 homes started in the year to March 2017. This was also a sharp rise on around 143,000 housing starts in the previous year.

The evidence shows the fall in London housing starts may be part of a longer term trend. Not only are new home starts in London lower now than in 2013, the Institute’s analysis shows that London’s contribution to the total number of new homes across the country has slumped from around 17 per cent to just ten per cent over the last five years.

The Housing & Finance Institute is calling on the Government to enact a two-pronged strategy to keep Britain building into 2018 and to meet the Prime Minister’s new ambition for 1.5 million homes by 2022.

The Institute wants London to be given “special measures” to avoid it falling further behind.

It also wants greater powers, resources and more support from central Government to help the South East and other regional areas continue to deliver the homes that the country needs.

Along with the new research, the Institute reports on the eight councils in the South East of England who have received national awards from The Housing & Finance Institute under their Housing Business Ready programme. The latest cohort of councils who are demonstrating strong ambition for housing in their area are Mole Valley District Council, Wokingham Borough Council, Maidstone Borough Council, Hastings Borough Council, Thanet District Council, Chelmsford Borough Council, Tendring District Council and Southend Borough Council.

Natalie Elphicke, Chief Executive of The Housing & Finance Institute, commented:

“Last year the government was warned by Lord Kerslake’s London Housing Commission Report that London’s orders for new homes may have peaked in 2015. Just over a year on and that warning has proved correct.

“In contrast, the Home Counties areas are powering ahead on housing numbers. The Home Counties areas have maintained the overall proportion of homes against the overall national increase in numbers – which is impressive. That ambition for housing delivery has been evidenced in our latest work with councils under our ‘Housing Business Ready’ programme.

“The latest figures show that there is no room for complacency as it is not certain that this strong housing growth in the regions is fully embedded across the country.

“In order to keep pace with the homes that are needed the Home Counties and the regions need more money for housing and infrastructure along with additional local powers from government.

“But relying on the Home Counties isn’t good enough. The London Mayor has set out a clear ambition for a step change in housing that is welcome. But London needs national support. It isn’t right for Government just to leave London to solve its own housing crisis.

“The Government should look again at the expert findings and recommendations in Lord Kerslake’s London Housing Commission report. They should consider taking additional and special measures as set out in that report in order to reverse this decline and ensure that the capital’s housing targets can be met.

“Commentators might presume that the fall in London is as a result of the Brexit vote last June. However, more detailed analysis presents a very different picture.

“While the country has been in relative growth, London has just not been keeping pace. This is part of a longer term trend that has seen housing performance in the Home Counties areas overtake London for the first time in the last five years.”