This summer a converted garage in Highgate was put on the market for more than the price of an average house in England and Wales. It was one more indicator that affordable accommodation is moving out of reach for many of the capital’s workers.
For £250,000, the 224 sq ft “one-bedroom studio” offered a small window, a couple of skylights, and a toilet squeezed into a corner between shower and hand basin; even some of these so-called “beds in sheds” are too expensive for many Londoners.
Decades of missed targets for housebuilding have left the UK – and especially jam-packed London – significantly short of affordable homes.
Mark Prisk, the housing minister, admits there is a “mountain to climb” to turn the situation around. Housebuilders’ pre-tax profits last quarter rose almost 10 times faster than the number of homes built and Mr Prisk is calling on them to step up construction of affordable properties. “I don’t have a problem with housebuilders securing good profits, he says. “But now we think the market has turned the corner and housing association demand is strong enough, I’m going to ask them, what are you going to do about it?”
The government is trying to encourage big institutions such as insurers and pension funds to invest in both the social housing and private rental markets. For affordable housing, it has committed itself to a 10-year rent policy to give investors more certainty about what rents they can charge, and in the private market, still dominated by individual buy-to-let landlords, it is pushing for longer leases.
But Roger Harding, head of policy, research and public affairs at Shelter, says the government is not taking the “bold choices” needed to control rising rents and help people buy homes. “Outright normal home ownership just won’t be an option in London,” he says. “It will become more of a question of shared ownership or long-term private rentals.”
Mr Harding thinks the government needs to boost shared ownership, to help create a secondary market that would encourage middle-income earners to view it as a viable option. He says London is losing these middle class professionals the fastest, making the capital a more polarised place to live.
“London is an increasingly unequal city,” he says. “Over the past 30 years those on middling incomes have moved out and the trend seems to be continuing: to remain living in London you need either a significant wage to buy or you need to be able to access social housing.”
Duncan Stott of the campaign group Priced Out, which lobbies for people who cannot afford to get on the housing ladder, says people are moving out of the capital so they do not have to spend so much on housing. “There are people in their 40s realising that the chance of getting a mortgage is very slim because of their age, and that often proves a wake-up call,” he says.
Mr Stott is calling on the government to restrict foreign capital investment in housing – perhaps by increasing stamp duty for foreign buyers – to ensure houses are lived in and not left empty as investments. “This is a bubble,” he says. “As the global economy improves, London property will be viewed less as a necessary safe haven and money may shift out of it.”