Housing shortage is pushing property prices higher

A fresh report from global real estate adviser DTZ shows that England is facing an annual shortfall of at least 70,000 new homes this year, despite government efforts to implement planning system reform in a bid to increase housing supply.

Chris Cobbold, head of DTZ's residential practice group, commented: “At present the government's strategy is like a two legged stool: relying on the traditional house building model and the new model of affordable housing delivery. This will not deliver the number of new homes the nation needs.”

The problem is most acute in popular areas of the country, particularly in London, where demand for residential properties is greatest.

In south London, for example, there are nowhere near enough homes to satisfy existing demand, especially in some of the most desirable areas like Wandsworth, Richmond and Wimbledon.

London-based residential property developer London Square's first development at Wimbledon Village is one of only a small selection of housing developments in the area. The £30 million scheme will feature 10 houses, starting from £2 million, on the site of what was once a convent.

Adam Lawrence, chief executive of London Square, said: “There is a shortage of new homes, a shortage of skilled people who understand London and it is very capital intensive to build here.”

With strong demand for property for sale in Wimbledon, Wimbledon estate agents have seen prices in many parts of the area increase in the past year, with the most expensive homes found on in Parkside, Wimbledon, where average prices stand at more than £5 million.

Estate agency chain Hamptons International is predicting that next year will experience a further price growth on the top end of the London property market of 4%.

Most Wandsworth estate agents would agree, largely due to a lack of new homes in relation to surging demand, while a weak sterling is attracting more international property investors.

“Overseas investors will be attracted to buying London property as a safe haven for investment, rather in the way that gold offers similar security,” said a Hamptons statement.

Another factor driving demand for property for sale in Wandsworth, particularly among young families, is the area’s excellent schools. Over a third of Wandsworth's schools have now been given an ‘outstanding’ rating by regulator Ofsted.

Of the 80 nursery, primary, secondary and special schools and Pupil Referral Units in the borough, 30 now have the coveted status, ensuring that Wandsworth has one of the highest numbers of outstanding-rated schools in London.

Jeremy Best of John D Wood & Co. told the press that pressure for family houses in Wandsworth now is massive, particularly those located close to the area’s best schools.

“We usually have 15 to 20 applicants interested in each house, all willing to compromise on their ideal home as long as they can be sure their children will get into the primary they want,” he said.

Further afield Richmond estate agents are also finding that there are not enough homes on the market, with an increasing volume of people actively looking to buy a property for sale in Richmond.

Until more new homes are delivered in south London, property prices will almost certainly rise, making it even harder to secure a home in this popular part of the capital.