Supply of new homes in London unlikely to keep up with demand
The supply of new homes in London will fail to keep up with demand over the next decade which is likely to push property prices in the capital higher, according to an analysis from global property firm Knight Frank.
The growing supply-demand imbalance in the city has already helped London property prices recover from the fall out of the financial crisis, with values in prime central London up almost 60% since 2008.
London's booming property market has attracted a host of national and international buyers, but the supply of new homes has failed to keep up with demand, and this trend looks set to continue.
Although the estimated value of units currently in the planning pipeline which are likely to be delivered over the next decade is around £80bn, based on current average borough values, the number of units will not meet the demand suggested by the creation of new households as London population continues to expand.
The London market, like the rest of the UK, has been adversely affected by a lack of new homes supply.
Housebuilding levels fell by almost 30% during the financial downturn in between 2009 and 2010, at a time when the population continued to increase. The number of people living in the capital has risen by 20% over the last two decades.
Grainne Gilmore, head of UK residential research, said: ‘Our data indicates that over the next 10 years, some 277,240 residential units will be completed in Greater London. Around 177,340 of these will be private sector housing. This overall development figure is an increase from our 2012 forecast for delivery of 240,000 residential units."