Olympics News Desk
A boom in affordable housing spurred on by the Olympics which will see 11,000 new homes built in east London will not continue past the summer Olympic Games according to new research. The boom is being overshadowed by the economic slowdown which has caused a delay in future residential schemes being financed, causing fears that the boom in construction will be short-lived according to a new research.
According to the London Residential Crane Survey by Drivers Jonas Deloitte, the property consultants, a possible fall in construction levels means that the potential buyers would have to rent for even longer as there is a continuing shortage of homes in London and a rising demand for property.
At the moment more than 39,000 new homes in over 247 different schemes are being built around the capital - a third of which are in the east London - marking a 40 per cent increase in construction levels comparing to 2010 figures.
The boroughs with the highest levels of activity are Tower Hamlets and Newham with 4,500 homes due for completion. Greenwich, Hackney and Barnet are also areas with thousands of new homes being currently built.
Developers tend to rely more on Asian investors, who seem to contribute to the high demand for homes in London, rather than domestic buyers who are struggling to obtain finance for new homes. The survey predicts that in 2012 the East will take a more active role in development, either by providing finance or getting involved directly.
Building rates however, have yet to reach government targets and are likely to fall even more according to the survey. Activities, which had started before the recession when the market was more optimistic, have already begun to slow down. The latest government figures have witnessed a weak economy with gross domestic product falling and unemployment rising.
During the past six months there has been a fall in the number of new schemes as well as a delay in schemes which had already begun. Anthony Duggan, Head of research at Drivers Jonas Deloitte says: ‘While the current development pipeline is looking considerably stronger for 2012, we would caution that some schemes due to complete this year are, in practice, likely to complete in 2013 or beyond.’
The fall in affordable housing development, which is down to less than 40 per cent of the new houses compared to 50 per cent for last year, is also another factor undermining future construction. Researchers consider uncertainty, generated by changes to the way affordable housing is funded, as the main cause of the decline. Also new obligations on developers to contribute to the funding of Crossrail, the new railway line linking East and West
London from April 2012, are believed to affect the viability of future affordable housing schemes.
All this is bad news for potential buyers looking for properties, especially affordable ones, in London. Duggan added: ‘The private rental sector may be an option for longer for than many potential homeowners desire.’
reporting by Angela Derveni