Hundreds of thousands more middle-earning workers crucial to supporting the capital’s economy and services will be priced out of inner London boroughs in a decade, a new report warns today.
It estimates that around 290,000 households earning less than £90,000 will no longer be able to afford to live in the heart of the city by 2035, according to the research commissioned by affordable housing provider Dolphin Living and conducted by Savills Research.
At the same time London will need an extra 200,000 workers to support key sectors like healthcare and tourism by 2035 and with limited housing available to these workers on median incomes, the housing crisis threatens to derail the city’s growth.
London’s population is expected to exceed 10 million by 2035, with a rise of 345,000 people in Inner London alone. But the projected current supply of new homes will only meet 40% of estimated need, worsening the the affordability crisis as prices get forced ever higher.
The mismatch between need and supply will result in a 43% increase in the number of households who cannot afford to live within Inner London by 2035. Overall, 1.2 million households will be priced out of London as a whole.
According to Dolphin Living, to solve this affordability crisis, tens of thousands of affordable new homes for sub-market rent, must be made available for median earners with a household income of between £45,000 and £90,000 who are not eligible for social housing yet are priced out of the housing market.
Olivia Harris, Chief Executive, Dolphin Living said: “As of today 900,000 households in London cannot afford market housing that meets their needs, yet don’t qualify for social housing, with Inner London alone accounting for 200,000 of those. In ten years’ time, due to population growth, that figure is expected to increase across Inner London by 43%.”
“This means that thousands of new jobs in key sectors like health, education and tourism are likely to go unfilled as median income workers are effectively priced out of the housing market and look to live and work elsewhere. The economic impact will be most acutely felt in Inner London, given 73% of those jobs will be within Inner London.”
“However, there are solutions, but they involve a change in approach. We need to build more homes for workers on median incomes to support those who currently cannot afford housing that meets their needs as well as the hundreds of thousands of new workers. Homes for intermediate rent for workers on median incomes in Inner London should be a key focus within future housing and economic growth policy.”
Jacqui Daly, Director, Savills Research, said :“London’s housing crisis is worsening, with those on lower incomes bearing the heaviest burden. There has been a persistent mismatch in the supply and demand of new homes in London.
“Reduced housebuilding combined with high prices is putting further pressure on already stretched resources and household budgets. Decisive government intervention is needed to support housing demand, and a step-change is essential to create a more affordable and sustainable housing market for Londoners.”
