London housing demand to outstrip supply by 48%

KUALA LUMPUR: Demand for London homes will outstrip supply by 48% over the coming decade, according to Knight Frank's “London Calling — London Residential Development Report 2013" report.

Although there is substantial increase in new residential development activities in many areas of London, an analysis of planning and construction pipeline confirms that supply will still fail to keep up with demand between now and 2022, according to the report.

"The overall trend for development in London shows that demand for housing in the capital will continue to outstrip supply by quite some margin," said Grainne Gilmore, Knight Frank head of UK Residential Research. “There is widespread recognition of the housing shortage in the capital, with the mayor pushing hard to encourage higher levels of development.

"While is it impossible for us to second-guess developers on when they will bring schemes forward, our judgments on schemes within the planning pipeline show that overall  delivery will not match demand."

Statistics from the Department of Community and Local Government show the number of new households will grow by 40% or 525,790 between 2011 and 2021. Conversely with supply the report highlighted that delivery of new units is estimated at 277,240 during the same period.

Based on current average property values it is estimated there will be £80 billion (RM388 billion) worth of properties in the planning and construction stages for delivery between 2013 and end-2022.

"However, we are not discounting ‘oversupply' in some local areas — with delivery outstripping local demand as measured by our data," Gilmore said. “Although the fluidity with which people can and do move across London suggests that the headline figures [of 48%] for supply and demand are a better indication of the wider trend in London." — by Wong King Wai

This article first appeared in The Edge Financial Daily, on July 5, 2013.

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