Just a 1% increase in housing affordability could yield a boost of over £7 billion to London’s economy over a 10 year period, new research from City Hall reveals.
Mayor Sadiq Khan yesterday warned that the legacy of the last government means we are now in the midst of the toughest environment for housebuilding in London since the global financial crash.
Speaking at the Centre for London’s annual conference yesterday the Mayor made the case for more investment in housebuilding and published a new report which reveals that just a 1% decrease in house prices in London could yield a £7.3 billion boost to the economy over a decade.
The new research – commissioned by City Hall, London Councils, Trust for London and the G15 – outlines the significant impact improving housing affordability could have on London’s productivity and the government’s growth agenda.
ESSENTIAL FEATURE
On building more affordable homes to boost growth and support Londoners, he told attendees: “It’s a given that affordable housing is an essential feature for any economy to thrive and grow.
“It allows employers to recruit and retain the best talent, prevents destitution and affords households, businesses and young people the freedom to spend their money in more productive areas of our economy.
“In turn, that leads to more jobs, higher living standards, better growth. And the virtuous circle continues.
HIGH HOUSE PRICES
“But in London, high house prices and rents relative to income are holding our economy back. And the new research we are publishing shows that affordable housing in London is absolutely critical if we are to realise our national growth ambitions.
“Our analysis shows that even a small change for the individual can produce something far greater for the collective. In fact, just a 1 per cent decrease in house prices could boost London’s economic output by 7.3 billion pounds over a decade. In short, investment in building homes people can afford, will lead to the growth we need. That’s why, as well as doing everything I can from City Hall, I’ll continue to make the case for the national investment we need – for the benefit of London and the whole country.
“If there was ever a time for more public investment in housing then it’s now.”
“If there was ever a time for more public investment in housing then it’s now. And if there was ever a place to show how government still has the capacity to improve the condition of people’s lives, then it’s housing.”
He added: “A lack of affordable homes is having a profound and devastating effect in every corner of our capital, impacting every part of our progress.
“It’s creating inter-generational inequality like we’ve never seen before. It’s shattering one of the bedrock principles Britain was built on: that if you work hard, you get ahead. And it’s having far-reaching implications for the demographics of our country and our capital.
“Ensuring everyone can have a place to call home goes to the very heart of why I got into politics in the first place: to help people from all backgrounds, races and religions to get the same shot at reaching their potential that London gave me and my family.”
CHRONIC SHORTAGE
Cllr Claire Holland, Chair of London Councils, says: “The chronic shortage of affordable housing in the capital is driving up homelessness and putting the brakes on London’s economic growth.
“Astronomical housing costs absorb a huge proportion of Londoners’ income, make it harder for businesses to recruit, and are a clear drag on productivity.
“As this important new research reveals, improving housing affordability in London would bring significant economic benefits, as well as helping those Londoners most impacted by the housing crisis.
“This is the latest evidence of why increased investment in affordable housing is so crucial. Tackling London’s housing pressures will boost productivity and help generate the economic growth we all want to see.”
