London property prices are falling, but we still need more affordable housing

In the first quarter of 2018, house prices across the UK have been slowly growing at a rate 2.7% higher than the same period last year. The most significant outlier, however, was London, where house prices have decreased by 1% since 2017, the first annual drop this decade. This market downturn has led half of Londoners to believe there could be a housing crash by 2023. Whether or not these fears are justified does nothing to detract from the need for affordable housing in the capital.

Mayor Sadiq Khan’s Affordable Homes Programme has already spent more on affordable housing than any mayor since 2011—a commendable 40% up on last year. However, although the year-end total of 12,526 homes between March 2017 and March 2018 is above Khan’s target for the year, it feels like the eventual goal to build 50,000 new affordable homes annually (starting in 2020) could be a long way off.

Indeed, it has been reported that a number of London boroughs are collectively “sitting on” at least £111 million of government funding (including £19 million for survivors of the Grenfell fire) which has gone unused. Combined with the 20,000-plus homes laying vacant in the capital, these statistics throw the last year’s 18% rise in rough sleeping and homelessness into sharp relief. But what benefits will building affordable housing actually have on life in London?

Affordable housing will encourage new, younger residents

At present, 80% of London properties are affordable to just 8% of the population. This is bad enough for people who live in the capital already. As the Financial Times notes, these house prices are driving the London’s youth out, with the city’s average age dropping by a year between 2011 and 2016. Removals company AnyVan notes that young people moving to London are having to settle down in the outer reaches of the city, with the once thriving “hipster havens” of East London now becoming too expensive for not only Londoners, but businesses too.

A recent report shows that many renters have relocated to areas far outside of the capital to commute in for work, with 46% of homes to let in Slough going to people relocating from London. Mayor Khan’s long-term housing plan, which aims to construct 650,000 properties by 2029, seems to be rectifying that, prioritising more central boroughs such as Camden and Tower Hamlets. This pledge is certainly generous, but it may arrive too late for the generation of young Londoners who have found themselves all priced out with everywhere else to go.

Still, as a Shelter spokesperson told The Debrief, the Mayor’s plan could prevent house prices from “strangling the ability of London to have people from all different types of backgrounds and all different wages”, which provides an optimistic projection for the future of London housing.

Affordable housing can alleviate the capital’s problem with homelessness

But what about those who have been forced into temporary accommodation, or sleeping rough? Statistics from the start of this year revealed that nearly 40% of homeless families are forced into that situation after a private tenancy finishes, while the mortality rate amongst those sleeping rough or in temporary accommodation has risen by over double in the last five years.

The mayor of Tower Hamlets, John Biggs, recently wrote a Guardian column outlining his plans for the future of housing in his borough. In the article, Biggs emphasised that “more affordable homes were built in Tower Hamlets than anywhere else in England” in 2017, in order to prevent families from being relocated out of the area, or out of London altogether.

But Tower Hamlets is just one borough, and UK-wide measures need to be put in place to bring down the rising number of people left homeless. One possible solution is following the example set by Finland, whose “Housing First” approach began in 2007, and has led to them becoming the only EU country with a declining rate of homelessness. The principle is simple: local authorities buy or build properties for homeless people to live in, and provide support for the issues (be they health, finance or drug-related) which led them to be homeless once housed.

In order for this scheme to succeed in the UK, affordable housing in London needs to be built or, at the very least, repurposed. According to Sky News, former Communities Secretary Sajid Javid had intended to roll out similar pilot schemes in the West Midlands, Greater Manchester and Liverpool. Considering that cuts by the current government to mental health provisions and social care have helped bring about the rising rate of homelessness, this announcement has been praised across party lines. However, since his recent transfer to Home Secretary, this may have tragically fallen by the wayside.

So while the falling cost of London property prices is good news for those looking to get on the ladder, the market is too volatile in the long term for this to be a lasting positive step. Increasing the availability of affordable housing in London is not only a way to ensure that the city can retain its younger population and the constant creativity that they bring—it’s how the capital can give its homeless citizens the second chance they so badly need.

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