'Affordability not shortage behind housing crisis'

Unaffordable housing costs sit at the heart of London's housing crisis and cannot be explained simply as a supply problem, a London think tank has said.

In the last two decades, house prices have risen far faster than earnings, the Centre for London said, drawing on ONS population and dwelling data and GLA affordability statistics.

It said its examination of housing stock and affordability data shows that overall housing availability in the capital has barely changed over the past two decades.

In 2002, London had about 421 homes per 1,000 people, a figure that dipped slightly after the financial crisis but has returned to a similar level in recent years.

The number of dwellings per household has also risen over that period, increasing from around one home per household to just over 1.1 today.

Rob Anderson, research director at Centre for London, explained that at the heart of the problem is a fairness and distribution problem.

The homes that do exist are increasingly owned by fewer people, and in ways that do not help ordinary Londoners - by renting them out expensively, leaving them empty and selling them at prices most people cannot afford.

In research shown to the Local Democracy Reporting Service, he argues that the inflation comes from factors such as who is buying up the housing stock, which includes foreign investors who buy London property as an asset rather than a home, pushing prices up.

Mr Anderson added: "There are as many owner-occupied homes per person today as in 2010, but houses are much more expensive. Home ownership is 270% more expensive than it was in 2002.

"Private rented homes are much more common, but rents have risen significantly as a share of incomes and now take up 42% of average private renter income."

He added that the data revealed that London had "experienced a deepening crisis of housing distribution" which had been driven by demand-side factors (economic policies and market forces driven by consumer demand) and changes in the tenure mix (such as owner-occupier, social housing) – as much as one of overall housing supply.

"The availability of social and affordable housing has collapsed and – while the relative availability of private housing has increased – the accessibility of private housing has fallen dramatically due to price inflation relative to incomes," he added.

In addition, he said although London was particularly susceptible to other factors such as macro-economic forces and the tax system, they were "too often absent from the conversation about the city's housing problems".

He added: "London's present housing crisis should be understood as a 'winner-takes-all' problem where changes in tenure mix and the distribution of stock are central to the collapse in meeting housing need."

The solution, he said, requires the acceleration of the private market supply of homes in London, expanding the delivery of social and affordable homes and addressing "demand-side" issues.

This could come in the form of cracking down on foreign investors, implementing rent controls and providing low-interest loans to housing associations to build social homes.

London mayor Sir Sadiq Khan has repeatedly argued for rent controls, most recently listing rent‑control powers among his key devolution demands.

Both Conservative and Labour governments have rejected granting these powers, arguing rent controls would reduce supply and worsen affordability.

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