The Mayor of London, Sadiq Khan, has warned that soaring energy costs, wages, material prices and financing costs will make it more challenging than ever to maintain the record-breaking construction levels of affordable housing in the capital.
Figures in London had been bucking the national trend last year despite unprecedented headwinds, with the number of affordable homes construction starts with City Hall funding between April and September 2022 up 90% on the previous year. Nationally, affordable housing starts were down 20% year-on-year.
Affordable housing completions in the capital are also 30% up on the previous year, following several successive years of record-breaking growth.
But despite the positive numbers, housing developers and construction firms in London face the most challenging economic environment in decades, with a succession of factors such as the Covid pandemic, Brexit and global supply chain shortages resulting in a 46% increase in construction materials costs since January 2020.
The previous recession in 2008 led to a 10% reduction in the construction workforce in London, which took almost a decade to recover from, and as the UK economy enters another troubling period, Sadiq Khan has called for government investment to safeguard London’s 197,000 construction jobs, support growth and prosperity, and address London’s housing crisis long-term.
Sadiq Khan said: “Over the last six years I have worked tirelessly with councils and housing associations against rising economic headwinds to deliver more affordable homes than at any time since City Hall’s records began.”
“Despite clear progress being made the turbulence in the housing market is deeply troubling for both developers and aspiring homeowners. The spiralling cost of energy, wages, construction materials and financing are all threatening City Hall’s hard-won gains.”
“Londoners can’t afford a construction slowdown and if the Government is truly serious about tackling the housing crisis then they must provide the funding and investment necessary to build the volume and quality of homes Londoners need. It is only through delivering high-quality housing that we can build a better London for everyone a safer, fairer, greener and more prosperous city for all.”
Source: Show House News
