Housing shortage in South London

With residential construction levels at a historical low, there is a well-publicised requirement for more new homes in South London to help cope with a rising population and growing demand for homes to both rent and buy.

Talk to Wimbledon estate agents and they will report that there is nowhere near enough property for sale in Wimbledon to cope with existing demand. Consequently, house builders are falling over themselves to develop more homes in this desirable part of South London.

Construction firm Shanly Homes recently announced plans to launch a new homes scheme in Wimbledon in early 2012 on the site of a former convent.

The development, called St Anne's Mews, will become a private gated development of much-needed family homes, including eight desirable three, four and five bedroom town houses located on The Downs, a popular area of Wimbledon. The development also includes the conversion of a six-bedroom Victorian villa.

Sean Purtill, partner at Ellison's who are marketing the new St Anne's Mews development, said: “There is a strong demand for good quality family homes in Wimbledon and this is an exceptional development which benefits from a great location - three of the eight properties are already reserved, despite the fact that the site hasn't officially launched yet, so we expect there to be a flood of interest when it officially opens early next year."

The fact that properties at St Anne's Mews start from £1.7 million shows just how popular an area Wimbledon is to live in, which in turn is pricing many people out of the market, further illustrating the fact that more homes need to be built locally.

Whether looking at property for sale in Holland Park or property for sale in Kensington, the situation is similar across many other sought-after parts of London.

The shortage of home in desirable parts of the capital means that the high-end of the London property market is defying the wider housing market slowdown, with property prices increasing in some popular parts of the city.

“You have got the macro uncertainty but there's a huge demand for property in London from international buyers and from UK buyers," Berkeley's managing director Rob Perrins said in an interview with Reuters.

A high level of demand for property for sale in Fulham, for example, means that many Fulham estate agents are finding that a mini-boom is occurring locally, mainly due to the lack of homes on the market.

“We're now already beyond the 2007 peak, with prime properties 10 per cent above the top of the market,” said Alex Oppenheim of John D Wood & Co. “It’s due to a lack of [housing] supply.”

The prospect of capital growth is an attractive proposition for property investors and homeowners looking to one day move up or down the housing ladder. For a lot of people, property has become part of their investment strategy. With saving interest rates at a historic low and private sector pensions in a rather sorry state, many people are now relying on property to fund their retirement.

Caroline Kavanagh of Townends estate agent said: “As other investment options continue to give little in return, property will become an increasingly attractive proposition and a more viable long term investment for many.”

The media is likely to paint a gloomy picture for the housing market in 2012. Initial signs are that the property market nationwide will remain somewhat subdued, with the exception of some primary parts of London, where property prices are expected to remain relatively stable or show modest growth.