London's Housebuilding Crisis Deepens as Starts Fall 84% Over Decade
New research has exposed a catastrophic decline in London's housebuilding activity, with housing starts plummeting by 84% since 2015 despite the capital's worsening accommodation shortage. According to data from consultancy firm Molior, private sector developers began work on just 5,547 homes in 2025, compared to 33,782 starts recorded a decade earlier.
Government Targets Versus Stark Reality
These alarming figures emerge as ministers demand 88,000 new London homes annually to address growing demand. The 2025 total represents a mere fraction of this target, with the final quarter providing some relief as developers commenced 2,294 buildings between October and December.
Lord Bailey, the City Hall Conservatives Housing spokesman, delivered a scathing assessment: “Over nearly a decade of Sadiq Khan’s mayoralty, London’s housing situation has gone from difficult to devastating — and it is ordinary Londoners who are suffering most. This is not just a housing crisis anymore — it is a crisis of stability, opportunity and dignity.”
Completion Forecasts Paint Bleak Picture
The research, published on Tuesday January 20, projects that 18,326 homes will reach completion in London by year's end – approximately half of currently ongoing constructions. Looking further ahead, only 14,053 homes are expected to be finished in 2027 and beyond, representing just eight per cent of the government's two-year London target of 176,000 properties.
This shortfall is exacerbated by work halting on 5,009 homes across 51 development sites throughout the capital. Molior's analysis attributes these stoppages to building contractors either collapsing under high construction costs or deliberately pausing work due to weak market sales.
Market Challenges and Policy Responses
The consultancy firm suggests London's housing market is increasingly excluding smaller developers, citing lengthy planning approval processes, escalating construction expenses, and a shrinking customer base as primary barriers. Only 8,436 new homes sold in London during 2025, a factor Molior identifies as directly contributing to reduced construction starts. To meet government objectives, at least 22,000 units would need to sell quarterly.
In response to the crisis, City Hall has implemented several measures to stimulate housebuilding, including a contentious agreement with the Ministry for Housing, Communities and Local Government to reduce developer affordability requirements from 35% to 20%.
City Hall's Defence and Future Plans
A spokesperson for the Mayor of London defended the administration's efforts: “Tackling our urgent housing crisis is a top priority for the Mayor and Sadiq is doing everything he can to deliver more homes of all tenures.”
The spokesperson highlighted record government investment of £11.7 billion through the Mayor's Affordable Homes Programme, alongside a new City Hall Developer Investment Fund backed by £322 million to support large-scale projects. Additionally, government backing for extending the Docklands Light Railway to Thamesmead could potentially unlock up to 30,000 new homes.
“However, housebuilding continues to be impacted by a perfect storm due to the disastrous legacy of the previous government, high interest rates, the rising cost of construction materials, the impact of the pandemic and Brexit and Building Safety Regulator delays,” the spokesperson added, noting emergency measures being developed with government to unblock housebuilding.
