London is facing its most severe housebuilding crisis since World War II, with a dramatic 72% decrease in new housing starts in 2024-25 compared to the prior year, totaling just 4,170 new homes. This figure represents less than 5% of its annual target of 88,000 homes, which itself contributes about a quarter of England's overall housing numbers. The Centre for Policy Studies (CPS) reported that London has completed more than 10,000 homes annually since 1946, but current low start numbers project only 4,550 completions in both 2027 and 2028.
The decline in construction is widespread across all housing types, with London local authorities starting only 90 homes last financial year, a 95% reduction from the previous year, and housing associations seeing a 78% drop. Five boroughs—Hackney, Lambeth, Merton, Richmond, and the City of London—started no affordable homes between April and September of the previous year. This shortage has led to London having the fewest homes built per capita among English regions, performing at less than a quarter of the rate of the rest of England.
The broader implications are significant, with Londoners facing exorbitant rents and difficulties in housing affordability. The slowdown also threatens the government's target of building 1.5 million homes before the next general election, particularly as London's housing crisis pushes up property prices in surrounding commuter towns like Guildford, Brighton, and Reading. Experts like Ben Hopkinson from the CPS argue that despite frequent parliamentary discussions on "planning reform," actual progress has been minimal, and government policies, such as the second staircase rules and issues with the Building Safety Regulator, are actively hindering construction.
This dire situation creates a ripple effect across the economy and society. The unavailability of affordable housing impacts businesses' ability to retain workers and limits population growth through declining birth rates. London currently has an estimated 210,000 homeless individuals, including over 100,000 children, and more than 300,000 households on social housing waiting lists, while average rents for one-bedroom properties exceed $1,300 in central London and $1,100 in most outer London areas.
