London Falling Short on Affordable Housing Amid Boom.

http://www.bloomberg.com/news/2014-05-12/london-falling-short-on-affordable-housing-amid-boom.html 

Property Shortage

Central London is the second-most expensive place inEurope to put a roof over your head after Monaco, according to broker Knight Frank LLP, and it’s getting worse.

Home prices in the U.K. capital rose about 17.7 percent in the year through February to an average of 458,000 pounds, the biggest increase since July 2007. That compares with an average of about 347,000 pounds in Sydney in March and 476,000 pounds in New York in the first quarter.

London’s mayor has set a target of building 42,000 homes a year, 17,000 of which would be sold or rented at a discount to market value, or for tenants receiving government assistance, according to a draft local government development plan. A shortage of properties is London’s biggest problem, he says.

Building Slump

The number of homes being built in the U.K. “has halved since the early 1970s -- largely due to local government all but ceasing housebuilding activity,” said Grainne Gilmore, head of U.K. residential research at Knight Frank. About 2,000 homes were completed by boroughs in the U.K. last year, a 99 percent drop from the 185,000 built in 1970, she said.

London has 200,000 plots of land with approval for homes that haven’t yet been built, according to the mayor’s office.

At the national level, Prime Minister David Cameron’s coalition has encouraged home buying, providing mortgage guarantees and interest-free loans and allowing down payments as low as 5 percent. The plan has drawn warnings from the International Monetary Fund for fueling a possible bubble.

Clouds are reflected in the windows of residential apartments at a new housing development in the suburb of Stepney in London. Four out of five Londoners think there’s a housing crisis, according to a London Councils’ poll in January.