Average London home will cost £650,000 by 2020, report warns

 

The cost of an average London home will soar by more than 40 per cent to almost £650,000 in just six years, a major report claims today.

It means a new generation of young Londoners will be excluded from home ownership, researchers warn.

Rents are set to go up by about a third, as housebuilding fails to keep up with the growth in the capital’s population.

The biggest price rises will be seen in cheaper outer London boroughs such as Waltham Forest, Haringey and Lewisham.

The stark forecasts — compiled by analysts Oxford Economics on behalf of the National Housing Federation— suggest many young workers will be forced to leave the capital because of a “huge shortfall” in new homes.

Lizzie Clifford, the federation’s London chief, said: “We need to address the housing crisis now, before another generation is left locked out and reliant on taxpayers to keep the roof over their head from one month to the next.”

The report, Home Truths, says average house prices will rise from £452,400 this year to £647,500 by 2020, and £776,300 by 2023. That will be 18 times average London wages, compared with 16 times now. It predicts a reversal of the trend of the past decade, with better-value outer London going up far faster than the overheating centre.

Prices in Waltham Forest will rise the most, by 84 per cent, from £272,200 to £501,300 over the decade, followed by Haringey, where they will increase 82 per cent, from £433,200 to £787,700.

The average rent across London will surge by 32 per cent, from £1,854 a month — already 82 per cent of average post-tax income — to £2,700.

Amid spiralling rents, almost a quarter of a million working Londoners claimed housing benefit in May, a 110 per cent rise since 2009.

Paula Higgins, of campaign group HomeOwners Alliance, said: “With property developers and buy-to-let landlords buying up all the properties in central London, it’s no surprise hardworking Londoners on normal incomes can’t afford a home there.

“This report shows even buying in the outskirts is an uphill battle. Options are running out — what is happening not only damages a generation locked out of being able to afford stable and secure homes, but damages London’s competitiveness.” The report called on Boris Johnson, the Government and the London Enterprise Panel to massively increase affordable housebuilding.

Last week Chancellor George Osborne revealed the Treasury is set to reap £5.5 billion more than expected from Londoners in stamp duty over the next five years. The Mayor has asked ministers for stamp duty receipts to be ring-fenced for new housebuilding.

His spokesman said: “The Mayor is working tirelessly to boost housing supply. He is on track to deliver 100,000 low cost homes — a record number — and recently secured an extra billion for affordable property to rent or buy.

“He is overseeing the largest release of public land for a generation to maximise housing supply, and is looking at new initiatives, such as housing zones with possible tax incentives, to ease demand for low cost homes.

But Green Party London Assembly member Darren Johnson said: “Two thirds of new homes are sold to investors. The Mayor needs to stop the land grabs for the super-rich, build far more social housing, and lobby for regulations to stabilise private rents and give tenants a better deal.”

Lucian Cook, director of residential research at estate agency Savills said: “There is a huge supply shortfall in London. We need to be building 50,000 homes a year.

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