House price fall could boost London’s economy, Sadiq Khan says

A 1% fall in house prices in London could yield a £7.3bn boost to the economy over a decade, mayor Sadiq Khan has said.

In a speech at the Centre for London’s annual conference, Mr Khan said a new report outlined the “significant impact” improving housing affordability could have on London’s productivity and the government’s growth agenda.

The new research was commissioned by City Hall, London Councils, Trust for London and the G15, a group of housing associations.

It found that that declining housing affordability “has had a significant negative effect on London’s economic productivity”.

The London mayor said the lack of affordable homes “is having a profound and devastating effect in every corner of our capital, impacting every part of our progress”.

He added: “It’s creating intergenerational inequality like we’ve never seen before. It’s shattering one of the bedrock principles Britain was built on: that if you work hard, you get ahead. And it’s having far-reaching implications for the demographics of our country and our capital.”

The mayor argued that more affordable housing in London would make it easier for businesses to attract and retain workers, and reduce homelessness and the reliance on temporary accommodation, which in turn would lead to more jobs and more investment for future growth.

During the general election campaign earlier this year, Khan called for a £2.2bn “emergency stimulus” package to boost home-building.

In last month’s Budget, the chancellor committed £100m in funding for the Affordable Homes Programme in London.

In July, the new government asked Khan to more than double the number of new homes being built in the capital each year.

He has been set a new target of 80,000 homes; about 35,000 were built last year.

But the Conservatives say the new figure is less than London needs and less than the target they had set the mayor for home-building in the capital each year.

In his speech at the Centre for London, Khan said: “In short, investment in building homes people can afford will lead to the growth we need.

“That’s why, as well as doing everything I can from City Hall, I’ll continue to make the case for the national investment we need – for the benefit of London and the whole country.

“If there was ever a time for more public investment in housing, then it’s now. And if there was ever a place to show how government still has the capacity to improve the condition of people’s lives, then it’s housing.”