London is falling even farther behind housing targets than the rest of England, posing a threat to the government’s promise to build 1.5 million homes over the next five years.
That is according to analysis by Savills in an article by its associate director of residential research Paul Wellman.
He points out that in the capital, the number of new homes on which construction began over the year to the end of September was 64% below the average for 2017-19.
The number of new homes on which construction completed has averaged 40,000 a year since 2016, but now sits around 36,000.
The number of homes needed, according to the official formula used in planning, is around 88,000 homes per year in London.
It means that less than 59% of the required homes are currently being delivered.
Wellman says: “There are various reasons why delivery in London is more challenged than anywhere else.
“Many of these are often referenced and lamented – land is even more scarce, viability more stretched, and the regulatory hurdles even more complex.”
But Wellman explains that the fact London developers typically have to build blocks of flats creates additional problems.
He says: “These tall buildings are inherently more complicated and expensive to build.
“They require more complex engineering and are subject to additional safety requirements and planning regulation.
“Additionally, once a tall building starts construction, it cannot be phased, unlike a typical housing development.
“And at the same time sales values have been, well, flat.
“Since January 2016, tender price inflation – a proxy for build costs – has increased by 44%.
“Prices for London flats meanwhile have only increased by 9%.
“As this gap continues to widen, viability becomes impossible, meaning that developers’ options are increasingly compressed.”