Property owners in London and the South East could see their annual mortgage repayments rising by over £3,000 by 2021, according to research conducted by the Centre for Economics and Business Research (CEBR).
The research ‘ which will form part of the CEBR’s Housing Futures 2012 Report, to be published in April ‘ found housing supply shortages are set to increase in London and the South East, meaning future property owners will find it even harder to get a foot on the property ladder.
The research predicts that by 2021, the proportion of income used to keep a roof over homeowners’ heads will increase from last year’s figures of 17.1% in London and 15.8% in the rest of the South East to 29.7%, and 28% respectively.
According to the CEBR, new estimates show that London’s population is set to increase by 1.25 million and the rest of the South East is set to rise by 1.5 million, over the next 20 years.
The research shows that unless an extra 860,000 homes in London and 990,000 homes in the rest of the South East are built before this time, a housing crisis in these areas is inevitable.
This means that between now and 2021, over 90,000 new homes need to be built in these areas every year. However, the CEBR estimates that in 2001 only 15,460 homes were built in London and 19,782 homes were built in the rest of the South East.
Douglas McWilliam, chief executive of the CEBR, said a housing and infrastructure time bomb is ticking.
‘If you own property in London you will benefit, but if you do not own a property and want to live in London, it will become increasingly difficult to get on the property ladder. If planners manage to create enough space for developers and are not restricted, the problem could be alleviated. However, developers need to be incentivised or houses will not be built. This could mean more homeless people and more people being squeezed out of the market,’ he said.