London Housing Demand Outpacing Supply

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As the London housing market continues to thrive, the demand for housing will surpass the supply by 48 percent in the coming decade, according to a new report from Knight Frank.  

Using new projections from the Department for Communities and Local Government, with data from the 2011 census, the firm shows a 40 percent increase in the number of households expected to be created between 2011 and 2021, totaling 525,790 households. But the development may not be enough to meet demand. The supply pipeline suggests an estimated 277,240 new units delivered in the next decade.

The census showed an unexpected rapid increase in London's population, increasing by 850,000 to reach 8.17 million. 

The London housing market has outperformed the rest of the U.K. in the recovery from the financial crisis, with rising demand and prices. Development activity has also picked up, with property in the planning or construction pipeline with a delivery date between now and the end of 2022 totaling £80 billion, based on current property values, the firm reports. 

Included in the estimate are projects in the planning stages. 

"While it is impossible for us to second-guess developers about when they will bring schemes forward, our judgements on schemes within the planning pipeline show that overall delivery will not match demand," Gráinne Gilmore, Knight Frank head of UK Residential Research said.  

There is a possibility for oversupply in some London areas, but the undersupply figures are a better snapshot of the wider trend in London, the firm adds.