London’s new homes target out of reach

London’s planning system is allowing new homes at an annualised rate of just 27,470 as of Q4 2014 – or just over two thirds (69%) the political target for 40,000 finished new homes each year. This was the objective announced by George Osborne and Boris Johnson in February and underlined in March’s Budget, ahead of May’s General Election.

Analysis of planning applications across all of the capital’s 32 boroughs plus the City of London shows just 6,780 homes were given planning permission last quarter, spread across 826 different sites.

These approvals represent 80% of all potential homes receiving a planning decision in Q4 2014. This is out of plans for 8,632 possible homes in Q4.

By contrast, if 100% had been approved, this could have allowed an annualised rate of up to 34,530 new homes or 86% of the official target rate.

In reality the number of homes reaching completion stage currently stands at an annualised rate of just 18,440 – after Q4 saw just 4,610 properties finished in the space of three months.

Despite this low base, London has seen an acceleration in finished homes. Last quarter’s figure represents a 30% increase from the previous quarter (Q3 2014).

This is almost twice the acceleration in home completions seen outside the capital – across the rest of England there was a 17% uptick.

However, new home starts were far lower last quarter, at just 3,040 – or an annualised rate of just 12,160 homes per year. If this pace of housing starts continues and is reflected in the annual rate of completed homes it would mean failing to reach even one-third of the government’s annual target.

Andrew Bridges, managing director of Stirling Ackroyd, said, “For culture, opportunities and sheer scale London now rivals any global megacity.

“But our capital must not become a victim of its own success – which means homes for everyone who can contribute to this city’s vibrant future.

“Homes have proved an excellent investment over previous decades, and today’s new Londoners demand the same opportunity. Planning must keep up.”