Rise in cost of new housing

MQT on 2014-09-17
Session date: 
September 17, 2014
Question By: 
Darren Johnson
City Hall Greens
Asked Of: 
The Mayor


Are you concerned by the rapid rise in the price of new build housing in London since you were elected in 2008?


Answer for Rise in cost of new housing

Answer for Rise in cost of new housing

Answered By: 
The Mayor

Boris Johnson (Mayor of London):  The challenge for us we have talked about at length today.  Everybody accepts the gravity of the problem.  Not everybody is agreed on how to tackle it.  One thing you have to do is just keep building more new homes.  It is absolutely true to say that the cost of new homes has continued to go up, but you have to continue to supply more. 

Darren Johnson AM:  Yes, and a 19% rise, according to the latest ONS figures in London.  Are you having a look again at your strategy?  Your strategy from the start has been, it is simple question of supply and demand, build, build, build, build.  It does not matter whether they are the most luxurious unaffordable developments or what, as long as you build that is going to solve the problem.  Is your strategy working? 

Boris Johnson (Mayor of London):  It is, in the sense that we are building a record number of homes and a record number of affordable homes. 

Darren Johnson AM:  It is not stabilising prices though, is it? 

Boris Johnson (Mayor of London):  You have to accept that the price of housing in London is very largely a function of the colossal success of this city, and the attractions of living here and the desire of people, not just in London, but around the whole country - and indeed from around the world - to migrate here.  What is very controversial obviously is the suggestion that international investors have been responsible for driving up these prices.  That is not borne out by the evidence, because the volume of sales to international investors, including people from Ireland, is running at only 3% of total sales on the London market and 6% by value.  The problem is the sheer strength of demand and you have seen the figures today saying the average house price in London is now over £500,000.  The way to answer the problem is, I am afraid, just to build more and to build homes that ‑‑ 

Darren Johnson AM:  That does not seem to be having ‑‑ 

Boris Johnson (Mayor of London):  ‑‑ have a different type of tenure and to expand the schemes such as First Steps that have so far helped 35,000 people on to the London property ladder.

Darren Johnson AM:  Have you any other ideas in terms of how you might stabilise house prices in London because clearly just your strategy of build, build, build without looking at how affordable each individual development is, is not working?  It is not stabilising prices, is it? 

Boris Johnson (Mayor of London):  We are building a record number of affordable homes and, as I said, we are expanding the size and the scope of the First Steps programme to help more people on to the housing ladder.  The schemes that we are exploring - apart from the housing zones that we have talked about and making sure that we put the brownfield sites in for development and all the schemes you know that we are pursuing - the schemes that we are really focusing on are ways to help people on modest incomes to get a share of the value of their home. 

Darren Johnson AM:  It is just more of the same and more rocketing house prices?  That is what Londoners can expect? 

Boris Johnson (Mayor of London):  If you look at the top of the market, it has been coming off quite a bit recently, so you are slightly behind the times in your analysis. 

Jenny Jones AM:  I bet we are not. 

Boris Johnson (Mayor of London):  There is a softening at the top of the market and it is inevitably cyclical.  There is no easy way to combat the lust of human beings to live in London and the consequent effect that has on prices, except to build more homes; and to help people who are on modest incomes to get all sorts of mixed tenures, so that part-buy, part-rent schemes have got to be a very important part of what we are doing.