Rising house prices a threat to ‘London’s competitiveness’
By Kate Allen
A pedestrian passes a row of residential houses in the Wandsworth district of London, U.K., on Monday, March 4, 2013. ©Bloomberg
Central London luxury-home prices unexpectedly rose at the fastest pace in 10 months in February as the British pound's depreciation helped attract international investors, Knight Frank LLP said.
Rising housing costs are a threat to London’s economic competitiveness, said business lobby group London Chamber of Commerce and Industry.
The group said in a report that London’s mayor Boris Johnson should force private landowners to hand over derelict sites to be redeveloped as housing, to boost the capital’s supply of new homes.
Nearly two-thirds of companies surveyed by the LCCI said that high housing costs pushed up wages, and 40 per cent said they made it harder to recruit and retain staff.
House prices in London have risen an average of nearly 18 per cent in the past year, according to figures from the Office for National Statistics.
A third of businesses said that long commutes affected their employees’ productivity and punctuality.
Long commuting times for workers in emergency services could make it harder for London to respond to major incidents in future, the report warned.
Colin Stanbridge, LCCI’s chief executive, said that increasing numbers of skilled workers were being priced out of the capital’s housing market, with “an increasingly detrimental effect on London’s productivity, competitiveness and resilience”.
Price indices have presented wildly contrasting pictures of the health of the housing market – according to some the boom is back, while to others the slump staggers on
“We urgently need to start building many more homes that ordinary Londoners can afford to buy or rent, otherwise we could find the workforce that is the capital’s greatest asset under threat,” Mr Stanbridge said.
Owners should be given a four-year grace period before their property is compulsorily purchased and sold for development, the LCCI recommended.
The mayor should also offer financial incentives to encourage more small housebuilders, it said.
The LCCI also called on the Treasury to loosen restrictions on how much councils can borrow, arguing this would help to fund the development of up to 12,000 more affordable homes each year.