Business groups to campaign for thousands more London homes

Two studies on Monday suggested that property prices in London, which have increased by almost 50 per cent since the financial crisis, are creating multiple problems for both businesses and individuals.

London Housing
One report, from the campaign group London First and consultants CEBR, said price rises were costing the economy more than £1 billion a year and preventing the creation of thousands of jobs as people find themselves having to plough money into mortgages and rents instead of spending cash on other things.Another report, from estate agents Countrywide, said that families and young workers living in rented accommodation but seeking to buy their first home were being forced to leave the capital in their thousands because of the high property prices.The Countrywide research suggested that 63 per cent of tenants in London about to embark on a house purchase were moving outside London because houses in the Home Counties were, on average, £93,000 cheaper.Official data from the Office for National Statistics puts the average price of a London home at £525,000, 46 per cent higher than the pre-crisis peak. Similarly, rents in the capital have risen by a third over the past decade.The London First report also found that workers in many sectors were now being priced out of the capital, while companies were being forced to pay more to attract staff and help them meet the expense of living in the capital.It said that the knock-on effects on consumer spending meant that as much as £2.7 billion could have been spent elsewhere in 2015 if housing costs had kept in line with inflation over the past decade. Such additional spending, the report said, could have supported almost 11,000 more jobs and boosted the economy by more than £1 billion this year.The report added that only the best-paid workers, such as executives and those in the financial sector, could "affordably" rent in central London."The housing crisis is making it difficult to attract and retain staff in retail, care and sales occupations," it said. "Even if they spend a limited amount on other goods and services, they are effectively priced out of living independently in the capital. They need to co-habit with partners, friends or family, or be eligible for social housing in the capital."London First will join business groups and the housing charity Shelter on Tuesday to launch Fifty Thousand Homes, a campaign that challenges London's government to reach an annual house-building target by the end of the decade.Baroness Jo Valentine, chief executive of London First, said, "This needless housing shortage needs urgent action. If we carry on as things stand, in 10 years' time London will be a no-go zone for employees across sectors and at almost all levels."Last week, a report by property agency Savills found that London was the most expensive city in the world for companies to rent residential and office space. However, the latest research on residential property by Knight Frank suggests that the price rises in the prime property market had cooled.Liam Bailey, Global Head of Research at Knight Frank, said, "The prime London property market has faced a number of headwinds in 2015, which reduced annual price growth from five per cent at the end of last year to 1.3 per cent in September."These challenges have been led by the increase in Stamp Duty at the end of 2014, a factor that will continue to weigh on transactions and price growth into 2016 as the market absorbs the new rates. Global economic uncertainty centred on China has also dampened demand to some degree."However, the strength of the UK's economic recovery, employment growth in London and the likelihood of continued low interest rates mean price growth will remain positive next year."For more Re:locate news and features on Residential Property, click here.

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