New London Homes Construction Falls Short of Target
Is the London property market in a precarious position at the moment, or are we just seeing a simple rule of economics in play?
June 18, 2014 (Newswire.com) - The housing market has definitely picked up in the UK over the last few years but no area comes close to the rapid increase in house prices than London. Many experts view London as a separate entity when it comes to calculating average house prices. The average price for a home in London is £485k compared to £270k in the rest of the UK. So why the disparity?
It comes down mainly to simple supply and demand; a basic principle of economics. London quite simply doesn't have enough homes for the need.
The mayor of London's administration set themselves a target to build 42k homes each year to cope with the demand but unfortunately this is not enough to match the housing need which according to housing and land director of the Greater London Authority, David Lunts is more like 49K homes.
The problem is exasperated due to the number of homes currently being built in London. Meeting the 42k target will be a challenge, he said. This is a challenge according to some experts that will be hard to meet for the private housing developers such as Taylor Wimpey.
Many agree that the private-public partnerships will allow the growth and enable the ambitious targets to be met.
Another challenge for this target is that a percentage of these new homes would need to be affordable homes, allowing a range of buyers whether first time, or previous home owners to afford to get on or stay on the property ladder in London.
Overseas and home grown investors are likely to result in around 5k of the 42k homes being rented homes which will open up the property sector for those who need to live in London but are unable to afford to buy.
Some experts are worried that the London housing market is currently in a bubble which is a worry since bubbles can burst, however, measures are being taken to reduce the threat of prices getting out of control such as the new mortgage reforms recently launched. This has already had an effect on the mortgage market and the numbers of new mortgages being approved.
It seems the London housing market will be up for debate for some time to come and whether the Mayor will get close to his target, remains to be seen.
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