Unaffordable Housing
Hugh Fasken, Editor of the Green Magazine, looks at the problems resulting from West London's property price boom
Like him or loathe him, Ken Livingstone does at least bring to public attention London�s (many) failings. High on his list is London�s property market, namely the capital�s high property prices born from a �chronic� shortage of housing and a growing population.
No where is this situation more acute than west London. According to the Land Registry, the average cost of a semi-detached house in Ealing is £283,708; in Richmond, £377,850; and in Hounslow, £246,140. Even flats cost, on average, £166,751, £225,453, and £187,484 in each borough respectively.
Given that the average London salary is £28,000 (which is inflated by City salaries and bonuses), it�s easy to see why high property prices pose a real threat to London�s growth, the UK economy and why the Bank of England is loathe to rise interest rates for fear of crippling millions of home-owners mortgaged up to their eyeballs.
It�s not just a London thing any more either. Property prices across the whole of England and Wales, especially now in the Midlands and north, are rising fast. According to figures compiled by the National Housing Federation, a social housing association, people earning less than £30,000 a year can no longer afford average house prices in over half of all counties in England. In 28 counties you need an income of between £30,000 and £40,000 to get a mortgage for an average home. In another 18 areas you need to be on over £40,000.
More importantly, there is only one London borough out of the 32 where you can buy a home on less than £30,000 a year � Barking and Dagenham. In all but four boroughs an income of over £40,000 is needed.
Understandably, therefore, the Mayor is keen to build more so-called �affordable housing�. Of all new homes built in the capital � about 25,000 a year are being built in London, though the Mayor wants more � 50% must be �affordable�. Neale Coleman, the Mayor�s policy director for housing, says: �Achieving the maximum reasonable number of affordable homes in the capital is vital to meet London�s spiralling housing needs, including homes for key workers like nurses, teachers and police who are essential to the city�s sustainable growth.�
All this is part of Ken Livingstone�s �London Plan�, his vision on how the capital should grow over the next 15 or so years. Its aim is to improve life for existing Londoners and to ensure that the 700,000 extra people forecast to move to the capital during that time can be accommodated. Despite its aggressive housing policy, on 22 July, the London Plan was given the go-ahead by an independent panel appointed to review it. In fact, the panel called for the London Plan to be adopted �as soon as possible�.
West London, one of London richest and most economically important regions, will have to take its fair share of new housing. The process has already begun. At the start of July, Minister for London Keith Hill MP launched the first housing strategy for west London. The seven London boroughs of Brent, Ealing, Hammersmith and Fulham, Harrow, Hillingdon, Hounslow and the Royal Borough of Kensington and Chelsea have joined forces to produce the West London Housing Strategy.
At the heart of the strategy is how to deal with the huge influx of new people into west London. The economy of west London is set to deliver �well over� 100,000 new jobs by 2016. But with the growth in population set to increase far faster than current plans for housing, there is likely to be a shortfall of 35,000 homes needed just to accommodate these new households, not taking into account the need to meet current demand.
The continued rise of house prices beyond the reach of people on low and middle incomes threatens the ability of West London to attract and retain skilled workers, warns the West London Housing Strategy group. But even with a deposit and the maximum mortgage, the average equity gap for the cheapest housing in west London is over £80,000 for those on average incomes. With high and rising private sector rents, the lack of local affordable housing has become a very real threat to economic growth.
Some councils are tackling the problem in other ways. In the middle of July, Hammersmith and Fulham Council ran a series of open days at Hammersmith Town Hall to help the borough�s key workers find out how they can afford to live locally. Experts such as local housing associations and financial advisers were on hand to offer advice.
More than 600 people attended the two-day event. Among them was local police officer, Macdonald Richardson, from Shepherds Bush. �Many key workers have a connection to the people and the area they work in, and we want to send our children to local schools, so we don�t want to live too far out,� he said. �But living in areas like this where the jobs are, can be expensive, so schemes to house key workers are very important. I do think there needs to be more attention to the different priorities of people. I really need a family home, which is much harder to find, but still very important.�
With a fired-up Ken Livingstone, as well as the current government, pushing for more active housing policies in London, west Londoners should expect more, not less, development.
Hugh Fasken
Article originally published in the Green Magazine and republished with kind permission
August 29, 2003