Mayor warns challenging economic headwinds could slow London’s affordable homebuilding

The Mayor of London, Sadiq Khan is warning that it is more challenging than ever to continue the record breaking levels of new affordable housing construction in the capital as energy costs, construction wages, material prices and financing costs soar.

Despite unprecedented headwinds, between April and September 2022 the number of affordable homes starting construction with City Hall funding increased 90 per cent at the same point in 2021. That compares with recent data showing affordable housing starts down 20 per cent nationally year-on-year.

As a result of several years of record-breaking growth in the Mayor’s affordable housing programmes, including council housebuilding, completions this year under the Mayor’s affordable homes programmes are also tracking 30 per cent ahead of last year’s performance.

But London’s housing developers and construction firms face the most challenging economic environment in a generation, with Government data showing that construction material costs were up 16 per cent in the 12 months to October 2022. The Covid pandemic, Brexit and global supply chain challenges have contributed to a 46 per cent rise in these costs since January 2020.

Following the 2008 recession, the size of London’s construction workforce fell by over 10 per cent and, took until 2016 to recover. Earlier this month, Deputy Mayor for Housing and Residential development Tom Copley met with leaders of public and private sector housing development programmes who have stressed the importance of avoiding this scenario repeating in 2023.

As the UK economy faces a troubling outlook for 2023, the Mayor is calling for government investment that safeguards London’s 197,000 construction jobs in the short-term, supports London’s growth and prosperity, and addresses London’s housing crisis in the long-term.

Mayor of London 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.”

By Mark Adair – Correspondent, Bdaily