“London needs 50,000 new homes a year, the equivalent of 18 new Olympic Villages and roughly double the current building rate, to address its growing housing crisis,” according to a new report from Savills.
Since the financial crisis, home builders have “shown a preference for delivering homes aimed at wealthier income-rich purchasers rather than credit-reliant buyers on lower incomes who may struggle to secure a mortgage,” according to the report.
The result? Crazy rich building in central London “at the expense of the construction of more modest homes in the less glitzy periphery.” From the report:
This focus must be rebalanced. Demand falls as you move up the housing market. The greatest unmet demand is at the lower end of the market where there is a shortfall of 15,000 homes a year. In the Mid and Upper Mainstream markets that gap is about 6,500 homes. In prime markets demand becomes harder to quantify because much of it has come from overseas in the past.
Here’s a chart showing the shortfall:
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