True or false? 7 key housing market facts unpicked

There’s plenty of opinion, and too few facts, when London’s housing market is discussed. Here, JLL head of residential research Adam Challis helps unravel some of the most frequent assertions:

1) There’s too few homes being built – TRUE
There are around 20,000 homes being built a year, against an established market requirement for around 42,000 a year. Simple economics applies: if there are too few to meet demand, so the price goes up.

2) There are too many foreign buyers – FALSE
London is an international melting pot, and has been for many years. Of the 33 London boroughs, JLL says 25 count than 30% of their residents as having been born outside the UK. In four boroughs, the count is over 50%. So there may be plenty of perceived foreign buyers, but many of them already live in the capital.

3) Foreign buyers are skewing the market – FALSE
Recent reports suggest just 6% of the market is accounted for by foreign buyers. That means UK buyers account for 94% of the action in the market.

4) Foreign buyers are deliberately leaving flats empty – FALSE
A survey of buyers by JLL shows that 85% are planning to rent out their flats; while the rest are either buying for a second home, or buying for children while they study locally. So that’s less than 10% (the second homes) likely to be left empty for a while.

5) Overseas buyers help revitalise the market – TRUE
Foreign buyers are more used to putting down a deposit before construction, which UK owner buyers can rarely do. With development finance from banks hard to come by in recent years, the deposits of foreign buyers have helped jump-start the house builders on several schemes.

6) The housing market helps the economy – TRUE
Housing is reckoned to represent around 3% of GDP, with the industry employing thousands of people. The Berkeley Group reckons each new home helps create 4.5 jobs.

7) Development gives back to communities – TRUE
Councils extract affordable housing contributions, the Community Infrastructure Levy, and Section 106 payments, as a condition of granting planning permission. These payments fund affordable housing construction, community and local authority projects.

Says Challis: “The only long-term solution to London’s housing affordability challenge is to find a closer balance between supply and demand. With population growth of around one million people expected over the next decade, the only solution is to seek strategies that weaken the boom/ bust market cycles that do so much to disadvantage aspirant Londoners.”

“This also means we should look hard to identify genuine solutions to expand supply, wherever they might lie.”

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