New research published this week shows a one per cent increase in housing affordability in London could yield a boost of £7.3 billion in economic output over a decade.
The analysis, jointly commissioned by London Councils, the Mayor of London, Trust for London, and the G15 group of London housing associations, uses a new economic model to outline the significant impact housing affordability has on London’s productivity and growth.
Between 2002 and 2021 the house price to wage ratio increased by 100% in London. Unaffordable housing stops people moving to match with a better job, and therefore deprives workers and firms from finding the best match. The most recent London Chamber of Commerce and Industry (LCCI) survey of businesses showed that 61% of London firms who tried to recruit faced difficulties in getting the talent they need. In our joint London Councils/LCCI survey of business leaders, housing costs was cited as the number one barrier to finding the right staff.
Responding to the findings, London Councils Chair, Cllr Claire Holland, said: “The chronic shortage of affordable housing in the capital is driving up homelessness and putting the brakes on London’s economic growth.
“Astronomical housing costs absorb a huge proportion of Londoners’ income, make it harder for businesses to recruit, and are a clear drag on productivity.
“As this important new research reveals, improving housing affordability in London would bring significant economic benefits, as well as helping those Londoners most impacted by the housing crisis. This is the latest evidence of why increased investment in affordable housing is so crucial. Tackling London’s housing pressures will boost productivity and help generate the economic growth we all want to see.”
You can read the report: Estimating the Effect of Housing Affordability on Economic Productivity in the Greater London Area, here.
