Within only a decade, London housing prices have risen 90 percent. Pricing younger generations out of the city they grew up in, past attempts to target the growing issue have fallen flat with many house hunters.
London Mayor Sadiq Khan, was the latest to pledge a change, with plans to spend £250 million buying land to sell to homebuilders. His plans however didn’t come without controversy. With thousands of so-called ‘rabbit hutch’ flats being built in an attempt to help. Which? writer, David Blake, worries that rather than helping Khan could actually end up hindering lower income families from stepping up on the property ladder.
“With the average micro-property selling for £279,000 smaller homes can represent a more realistic opportunity but can also be harder to mortgage.”
The London Mayor has also offered encouragement to employers, asking them to offer staff loans in order to cover rental deposits. Arup, Mace Group and Grant Thornton UK LLP are amongst those who’ve already signed up for the scheme.
These new implementations however might not actually be targeting the root of the problem, with wages failing to keep up with London’s rocketing housing prices. In 2015, London’s average house price was £472,000, 13.5 times the annual average wage within our capital city. When the typical mortgage only allows a maximum borrow of 4.5 times your average earnings, owning our own home is out of reach for most of us.
Many people put this rising problem down to the growing trend of the world’s super rich opting to invest in London property. Over-saturating an already struggling market, 19,845 homes sat idle in London over 2016, with their rich owners choosing to leave the home empty rather than offer it out to renters.
And this isn’t that foreign investors just happen to have their finger more on the pulse, but that they’re actively being targeted by property developers. In fact 1 in 10 newly built properties in England are marketed abroad first, with that number leaping to 75% for inner London. When the first phase of South Gardens in Elephant Park went on sale, all 51 properties bought by April 2017 were sold to overseas investors.
The Bow Group, the UK’s oldest Conservative think tank, suggest the only way to target this is through following the example of Denmark, Switzerland and Australia, making it much tougher for foreign buyers to own a large chunk of the UK housing market.
“It is shocking that we allow millionaires in Singapore to buy land and property in Britain, but Singapore bars British and other foreign nationals from buying in their country”- Patrick Collinson
Denmark prohibits non-EU nationals from buying a home unless they have lived in the country for five years, whilst also restricting EU citizens from buying second homes. Australia bar non-resident investors from buying resale houses unless they plan to live there full-time and Hong Kong do not allow foreign investors to purchase property in high-demand areas.
When these schemes are working so well for our friends across the pond, why is it that we are still allowing £9.4bn worth of homes to lie empty within London? And as London becomes an investment hotspot, will our inner suburbs soon lie empty as we all travel even further to get to work?