Household growth in London is expected to be much greater than previously anticipated, according to recent data from DCLG; Knight Frank’s “London Calling – London Residential Development Report 2013” is the first report to take account of these upward revisions.
The total sale value of property currently in the planning and construction pipeline, for delivery between 2013 and the end of 2022, is £80 billion, based on current average property values
New household growth projections from DCLG, which take into account Census 2011 data for the first time, show a near 40% rise in the number of new households expected to be created in London between 2011 and 2021: a total of 525,790
The supply pipeline suggests that delivery of new units will fall far short of this, with an estimated 277,240 new units expected to be delivered over the next decade
This shortfall is despite an uplift of 63% in 2012 on the 2011 figure in the annual number of residential units granted planning consent in London.
Supply in central London boroughs will also be constrained, with pipeline data suggesting that new units delivered will meet less than half of housing requirements.
Despite the undersupply developers need to be conscious of pricing, especially on the edges of prime central London, Knight Frank says.
Gráinne Gilmore, Knight Frank head of UK Residential Research, comments,
“The overall trend for development in London shows that demand for housing in the capital will continue to outstrip supply by quite some margin. There is widespread recognition of the housing shortage in the capital, with the Mayor pushing hard to encourage higher levels of development.
“While it is impossible for us to second-guess developers about when they will bring schemes forward, our judgements on schemes within the planning pipeline show that overall delivery will not match demand.
“However, we are not discounting ‘oversupply’ in some local areas – with delivery outstripping local demand as measured by our data. However, the fluidity with which people can and do move across London suggests that the headline figures for supply and demand are a better indication of the wider trend in London.”
