This year was a sell out! 2002 will be just as big!
NEWLY published Government figures reveal the underlying reason for rampant and long-term house price inflation in London and the south east. While the number of households in the capital increased by more than six per cent - 184,000 - over the past four years, the number of new homes built over the same period was just 58,000.
While 43,000 new homes are needed annually in London to cater for demand just 12,000 were built last year. The total for 2001 will almost certainly be lower. This imbalance between supply and demand is the principal cause of house price inflation.
Both the government and London Mayor Ken Livingstone agree there is a need more housing for sale and for rent. But the housebuilding industry is warning that Mr Livingstones demand that half of all new housing must be affordable will further reduce, rather than increase the number of homes built.
The situation in London is more serious than in the UK as a whole which last year saw less new homes built than in any year since 1924. The planning system, far from assisting development, is reducing the number of homes being built at a time when household numbers are increasing.
A spokesman for the House Builders Federation, said: Ken Livingstone is calling for more affordable housing to help nurses, teachers and other key workers to buy homes of their own. But without the government funding to make this possible, his demands are having the opposite effect.
Under current planning rules, 25 per cent of all new homes in the capital are subsidised by housebuilders to provide affordable housing. Mr Livingstone wants to increase this total from 35 to 50 per cent. However, landowners and developers are being put off by what is already seen as a severe and increasingly onerous tax on development and are pulling out, preferring to leave land vacant or sell it at greater profit for commercial uses
It makes no sense to ask developers to take on loss-making projects. They will simply walk away. Ken needs to realise that 50 per cent of nothing is nothing.
As a result, house prices are likely to continue escalating further beyond reach of key workers as the imbalance between supply and demand widens. At the same time derelict land that could be used to improve London by making urban regeneration a reality, continues to lie abandoned. The governments stated aim is a decent home for all. How this can be achieved when the country is only building half the homes it needs, is a mystery.
Anyone priced out of buying a home of their own should realise that the cause is because there simply arent enough homes to go round.
An analysis of the situation by leading surveyors GVA Grimley warned that the imposition of Mr Livingstones ambitions could lead to a complete stagnation of residential development across the capital.
In England as a whole, household growth of 785,000 (196,000 per year) exceeded expansion of the housing stock by 195,000 (49,000 per year).
HOUSEHOLD GROWTH: PREDICTED AND ACTUAL
The 1996-based household projections for England, upon which the most recent round of regional planning guidance revisions were based, projected annual average household growth of 161,000 for the period 1996-2001. Actual annual average growth over the first four years of this five-year period was 35,000 higher at 196,000 per year. Household growth in London was 21,000 higher than projected.
In other words, regional planning guidance provision for new housing, based on the 1996-based projections, is well short of growth in housing need. In the South East, where regional guidance accepted housing provision below even the 1996-based projections, the shortfall against need is even greater.
Most of the household growth overshoot arises because net international migration gains in England have far exceeded the assumed rates of gain in the 1996-based population and household projections. The 1996-based projections assumed net migration gains of 96,000 and 81,500 in 1996-97 and 1997-98 respectively, and annual increases of 66,000 per year from 1998-99 to 2021. Actual annual increases in the four years 1996-97 to 1999-2000 were 96,000, 112,000, 183,000 and 177,000. Because a large majority of net international migration gains are in London and, to a lesser extent, the South East, it is not surprising household growth in London has far exceeded projected growth.