Housing data from the last quarter show that London’s house prices fell by 4.1 per cent in the year to November 2017, the largest fall since August 2009. Prices by property type across London show mixed fortunes. Meanwhile tube ridership continues to decline.
Tube and Bus Journeys
The last three periods (of four weeks each) have seen declining year-on-year numbers of tube journeys – between 1.3 and 1.8 per cent drops. Possible reasons identified for this fall– in a period of economic expansion and population growth, and despite a fare freeze – include the knock-on impact of the Southern Rail dispute, heightened concern about security, an increase in use of private hire services such as Uber, changing work patterns, and changing consumption habits.
Declining tube usage is one of the reasons TfL is expected to not achieve its projected fares income this financial year, anticipated to generate £239m below the estimate. If this turns out to be a trend, rather than a blip, TfL will need to rethink its whole business model, particularly the balance between fare revenues for public transport and charges for road users.
Bus use, on the other hand, is recovering slightly after several years of stagnation, with growth of 0.6 and 0.8 per cent in the two latest periods, perhaps indicating a continued positive effect of the Hopper fare, which went unlimited in January 2018.
London’s house prices fell by 4.1 per cent in the year to November 2017, the largest fall since August 2009, according to Acadata figures used by The London Intelligence. The rest of England and Wales is also experiencing a slowdown, although not to the same extent – prices rose by a modest 0.9 per cent over the year to November.
Borough-level prices (albeit unadjusted) show a more complex picture across the capital: western inner London boroughs saw a fall of 3.5 per cent on average, while outer boroughs to the south and west/north west were more buoyant, with rises of 9 and 11 per cent respectively. Inner east and outer east/north east saw more subdued growth of 5 and 4 per cent.
Prices by property type (albeit unadjusted) across London show mixed fortunes. In the year to November, the average price paid for flats fell by 6.7 per cent, with terraced house prices also falling slightly (-2.3 per cent). Prices for semi-detached and detached houses, meanwhile, rose 3.9 and 0.8 per cent respectively.
Transactions by property type
As noted in the last issue, transactions in the capital have been relatively subdued since 2009. Looking at property types, flats account for the largest number of transactions in the capital, but have experienced the largest proportional drop in sales: transactions were down over 25 per cent for the three months to October 2017 (compared to 2016).
Decisions made on residential planning applications in London show that the total number of decisions (and the number where permission was granted), fell slightly in the third quarter of 2017 (when compared to the previous year). Just over 150 major schemes were decided upon, with 122 granted permission. The respective figures for minor decisions were 2,800 and 1,800.
While schemes receiving permission have grown in recent years, there is still a significant problem of sites with planning permission being left undeveloped – recent research suggests nearly half (46 per cent) of new homes given planning permission had not begun to be built, across the whole of 2017.
Only two thirds of decisions received permission in Q3 2017 (a figure which has been falling recently), perhaps indicating growing community concerns about affordable housing levels and local impact of schemes.
For the year to September 2017, new housing starts picked up a little compared to the year before, to nearly 20,000 units, while completions also rose to nearly 24,000 over the same time period. However sales, particularly of one bed flats, have slowed and prices dropped. It remains to be seen the impact this slowdown will have on starts in future periods.
Net additional dwellings
New builds are only one element of meeting London’s housing needs, and net additional dwelling figures for the full year 2016/17 paint a fuller picture. At the city level, net additional dwellings were nearly 40,000 in the latest data – a significant improvement on the previous year, and only just shy of the 2016 London Plan’s target of 42,000. This was helped by a significant proportion which came from change in use – nearly 9,000, or 22 per cent – a much higher proportion than in previous years. This could reflect the growth in ‘permitted development’ of commercial buildings, a form of supply that is highly controversial among London boroughs, as it does not include affordable housing or other planning obligations, and results in loss of commercial space in many town centres.
This increase in supply means that 15 boroughs met or exceeded the monitoring targets set out in the 2016 London Plan during 2016/17. But if the new draft London Plan’s targets had been in force, only three boroughs would have met them, with some of the biggest shortfalls in outer London boroughs.