17 August 2023

London’s Housing Market Worsens City’s Inequality – Think Tank Analysis

Londoners are more likely to live in a good quality home depending on their ethnicity, location, and economic background according to a new report from Centre for London, London’s think tank. The report highlights disparities in access to housing, underpinned by the current state of the capital’s housing market.

The research in Homes Fit for Londoners: London’s Homes Today reveals that:

  • There is significant variation by borough in the number of overcrowded homes, from 5% in Richmond upon Thames to 22% in Newham.
  • Londoners from a White British background are more than twice as likely as Londoners from a Black background to own their home (59% vs 26%).
  • The average rent in London is equivalent to 40% of average household income, compared to 26% across England.
  • London’s high housing costs contribute significantly to the capital’s poverty level, with 25% of Londoners living in poverty after paying for housing – one of the highest rates of any English region.

In the first part of their ongoing research programme, Centre for London have explored the impact of London’s housing market on its residents. Their research has found that demand is far higher than supply, meaning there is a huge lack of available affordable homes, pushing some people into poverty and forcing others out of London altogether.

Further, many Londoners are now living in conditions that are increasingly insecure, unsafe, and further away from the city centre.

In particular, the research has found that local authorities are struggling to house thousands of people who are homeless and need temporary accommodation. The number of people who require it is up by 5% in the year to February 2023. The number of rough sleepers in London is also up by 50% in 2021-22 compared to 2011-12, and more than 300,000 people are on the waiting list for social housing in the capital.

While there is broad agreement about the scale of the problem, there is much less agreement about what can be done about it. The report summarises how, while policies at all levels of government can influence homes in London, achieving a flourishing and sustainable housing system will depend on a combination of bigger-picture solutions to respond to London’s complex housing challenges.

London and national leaders need to reconsider what is politically and practically possible to fix the problem, and policymakers should work alongside businesses, housing developers and investors to do so. The report argues that their contribution – through measures such as impact investment for affordable housebuilding – is essential. Long-term partnerships like these are vital to keep businesses and the public sector running. 

Claire Harding, Interim Chief Executive at Centre for London, said: “Getting to grips with fixing London’s housing market will be no small feat, and our report sets out the scale of the challenge we are dealing with.

For too long, politicians have been complacent about the lack of decent homes for Londoners. Too many are living in poor housing and being forced into poverty as a result. As our research shows, this is especially true for people from disadvantaged and minority communities.

Progress in building more affordable homes can only be achieved through big thinking about long-term solutions. We look forward to sharing what these should be later this year.”

Ben Denton, Chief Executive of Legal & General Affordable Homes, said: “London’s housing market is a microcosm of the housing challenges facing the nation.  For the city to continue to thrive, we need a functioning housing marketplace where people from all walks of life can afford to live. Good-quality, affordable housing acts as a firm foundation for healthy, engaged, and economically active communities.

“To tackle the capital’s complex housing challenges, we need to dial up collaboration and long-term solutions—and these must come not only from local and national governments but also housebuilders, developers, and investors. Leveraging insights, expertise, and capital from across the public and private sector, and in collaboration with organisations like Centre for London, can help drive ways to better serve the diverse housing needs of London’s communities and deliver a more inclusive housing marketplace.”

As part of their ongoing programme, Centre for London will set out their view on the package of policy tools that will together be most successful in providing good quality, affordable homes for all Londoners. This report has been sponsored by Legal & General, the G15, London Housing Directors Group and London Legacy Development Corporation. The second and final report will be published in Winter 2023.

Read the full report here