London’s future in jeopardy due to vast home deficit. Is nostalgia fast becoming a luxury we can’t afford?

A recent report from London Councils, a body representing all 33 of London’s local authorities, has suggested that only 250,000 new homes will be delivered by 2021 in the nation’s capital – a long way below the target of 800,000 they believe is required to maintain London’s future as a global city.

With prices rising substantially in London throughout the recession and now accelerating further as growth sets in (see our factfile for the figures), London’s property has been a popular topic of debate amongst industry experts. This report has shed light on the stark difference between the actual number of homes being delivered, the majority of which will not be affordable, and that which is required to keep London’s prices stable and affordable to those who are not foreign investors or city executives.

With an average property price rise of 9.7% across London for the year ending July 2013, a solution needs to come quickly.

Some have suggested that, if the price of construction and the cost of procuring land are combining to create the current level of supply, action needs to be taken to reduce construction costs – the most adaptable of those two primary factors.

Reducing Construction Costs

Whilst small advances have been made around the periphery of construction, in technologies like Building Information Modelling, Computer Aided Design and in the more efficient production of components – sometimes utilising modern materials like prefabricated concrete – these have proven to be, in the grand scheme of things, minor amendments to the overall costings.

Could a wholesale rethink of how we construct our new homes be plausible? Should nostalgia towards bricks and mortar stand in the way of housing London’s millions?

In the post war period, pre-fabricated housing was invented to satisfy the huge demand for homes left by the devastating blitz. Some claim that today’s deficit in property supply is equally bad and requires an equally dramatic solution.

Sir Steve Bullock, Lewisham Mayor and London Councils’ executive member for housing, agrees:

‘The news that London needs almost a million homes by 2021 is a scandal – the last time we faced such an acute housing supply crisis was after the Second World War. This is a long time coming and the capital’s future prosperity is on the line.

‘With London’s population expected to top nine million by 2021, we need to use the party conference season to explore the radical strategic steps needed to build almost a million homes – such as lifting unnecessary restrictions on councils borrowing to invest in new homes and helping small businesses win construction contracts.’

The answer may lie in the proliferation of the modern equivalent of pre-fabricated properties. Although aesthetically these may not be as pleasing as the traditional bricks and mortar approach, architectural advances are overcoming these problems and the method – including production of precisely fitting components off-site – has the major advantages of cheap overall costs and fast on-site assembly times.

The Modular Building Institute, leading the way in promoting such techniques, has the apt strapline – ‘changing the way the world builds’ and more information on modern techniques is available on their website here.

Alternatively, timber frame properties now make up approximately one quarter of all new builds across the country. Creating the inner leaf using a strong timber frame is a more cost-effective solution than two leaves of masonry and the further advance of this method may also help to increase the numbers of completed properties developers can deliver each year. Externally, these properties look just like traditional houses.

Other Considerations

We at PropertySurveying.co.uk have oft written on the ongoing problem of empty homes. If the solution lies in low construction costs, then developers should be encouraged away from Greenfield sites and on to renovating properties already standing. Although the architectural flexibility is less, the potential benefit, particularly to the affordable housing market, is extensive.

Sadly, the returns for such redevlopment are less than for greenfield construction and developers will, until incentivised otherwise, continue to seek out the greatest returns.

Others may highlight the architectural culture as being a primary issue, with Design Quality Indicators (DQIs) being chief in the minds of designers and developers, averting the compromises that some argue need to be made to fulfil London’s needs.

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If the London Councils are to be believed and 800,000 homes are required by 2021, can it be done without a fundamental change in construction culture and outlook?

Let us know your thoughts by dropping a comment in the box below.

SJ / LCB                                                                                                         04/10/2013

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