There isn’t enough social housing – 300,000 Londoners are on the social housing waiting list. At the same time, London’s private rented homes are extortionate, and increasingly out of reach for those on low incomes. And for many, buying a home is a pipe dream.
Economic growth and the cost of housing are closely linked. More affordable housing creates a more dynamic and efficient labour market; it attracts talent and boosts productivity.
Commissioned by City Hall, London Councils, Trust for London and the G15, NERA looked at over 140 local authorities across London and the South East, using data from the last 20 years. Its core finding was clear: when housing costs go up, productivity goes down.
Specifically, it found that an increase in housing costs by 1% reduces productivity by 0.14%. This might sound insignificant. But across the whole of London, it has a huge impact.
The new government has made economic growth its number one priority. This report shows that if it’s going to achieve its ambitions for national economic growth, the government needs to tackle London’s housing crisis once and for all.
Ultimately, the only answer is a once-in-a-generation investment in social housing. This will cost a lot of money. Research from Shelter shows that building 90,000 social rented homes would add £51.2bn to the economy.
When the Treasury invested in building affordable homes in the past, the money came back, with profits. But building the number of social homes that London needs will take time. Faster solutions - such as permanently linking LHA rates to the cost of living is required so that more homes are affordable to Londoners on the lowest incomes.
The scale of London’s housing emergency is awful. This new research only adds weight to the urgency of taking real, ambitious action.
