A report from property consultancy Arcadis has found that London expects to build over 35,000 new homes over the next ten years. While more housing might be welcome news, the ‘luxury’ aspect is unlikely to be popular with the average person due to the large amount of unaffordable properties already in London.
Most of the luxury homes will be found in Chelsea and Fulham at a combined worth of around £20 billion. 8,863 properties will be in Southbank totalling £14.2 billion. The combined sales of 
these properties is estimated to total a huge £77 billion.
Meanwhile, London is facing a housing crisis affecting renters. Those on low incomes simply cannot afford to live in a city that for many has become an investment pool rather than a place to live. Last year London was named the most overvalued property market in the world by Swiss bank UBS.
So who will benefit from this London luxury property boom?
Mark Cleverly, head of commercial development at Arcadis has said that due to the rising value of luxury property in central London, it has become a very sought-after location. “It is hardly surprising that we have seen ongoing interest from investors all over the world.”
Around 4.5% of the City of London is owned by offshore companies and 7.3% in Chelsea and Kensington. This probably explains the focus on new building in Chelsea in particular. Some of England’s most expensive streets can be found in these areas. Victoria Road was named as Britain’s most expensive street with an average property value of £8.06 million.
On the other hand, the average earner is increasingly getting pushed out of the city or has no choice but to keep paying high rents. While some Londoners are hoping for the housing bubble to burst, many have gone north in search of homes and jobs, due to the high competition for both in the capital.
For those more concerned with cheaper housing, Cleverly said “in the longer term we may see some schemes coming through with less prime and more affordable housing, or maybe a gradient of different properties.”
Asking prices falling?
Zoopla found that the average value of London property increased by £70,130 last year, jumping up by 11.8% to an average of £655,305. Compare this to the North West, where property prices are an average of £183,597, increasing by £9,833 at a percentage of 5.6%. Recent research from online estate agent eMoov found that Bolton was the only location in England that had seen a decrease in property value since 2000.
However, a recent study from Propcision actually found that property asking prices were falling in London. Around 25% of properties in Chelsea and Knightsbridge have been reduced. Whether this will apply after the new homes are all built is another question to ask. For people on low incomes, property in London is still unattainable for most.
How are small businesses affected?
Small businesses are finding it difficult to afford rents, find staff and then afford to pay them the wages needed to live in London. The price of office space is the main factor holding small businesses back in the city. Investors are pricing SMEs out of the market for office spaces which are often being converted into high value apartments.
According to the Federation of Small Businesses (FSB), central London is the hardest place to set up a company and keep it going. London ranks lower for small business success in comparison to other international capitals. Meanwhile, start-ups are growing in other parts of the country particularly in the north where running costs are much cheaper.