Home construction in London’s private sector has plummeted by 84% since 2015, even as the city requires 88,000 additional residences each year, according to a recent study.
Consultants from Molior revealed that in 2025, only 5,547 new private housing units were initiated, a stark drop from 33,782 in 2015.
Lord Bailey, a member of the London Assembly, remarked that the housing situation in London has shifted from “challenging to catastrophic,” emphasizing that “regular Londoners are bearing the brunt of the crisis.”
A representative for the Mayor of London stated, “Addressing our pressing housing dilemma is our foremost concern,” stressing that “Sadiq is making every effort to provide more available homes across various tenures.”
Bailey told the Local Democracy Reporting Service (LDRS) that “this has evolved beyond a housing emergency to a crisis impacting stability, opportunity, and dignity.”
He recalled warning years ago that the mayor’s approach would precipitate a decline in construction, which, unfortunately, has come to pass.
Approximately 18,326 residences are anticipated to be completed in London by the end of this year, which represents roughly half of the homes currently being built.
An additional 14,053 homes are not projected to be finished until 2027 or later, accounting for only 8% of the government’s ambitious two-year target of 176,000 homes for London.
This results in a staggering shortfall of 92%.
Furthermore, construction has ceased on 5,009 homes across 51 development sites in the city.
Molior suggests that this may be attributed to builders “going bankrupt” due to elevated construction expenses or intentionally delaying projects in response to a sluggish sales market.
The firm also noted that only 8,436 new homes were sold in London in 2025, which it claimed has “directly influenced the decline in new construction starts.”
To meet government objectives, at least 22,000 homes must be sold each quarter.
A spokesperson for the Mayor added, “This year, we are urging housing developers to apply for a record £11.7 billion of government funding through the Mayor’s Affordable Homes Programme to enhance social and affordable housing throughout London.”
“This will complement the introduction of a new City Hall Developer Investment Fund, supported by an initial £322 million, aimed at facilitating large-scale development in London.”
The government has also backed plans to extend the Docklands Light Railway to Thamesmead, a move expected to unlock approximately 30,000 new homes for residents on both banks of the river.
Khan pointed out that the downturn in housing development is a consequence of the “devastating legacy of the previous administration, elevated interest rates, increased costs of construction materials, as well as the repercussions of the pandemic and Brexit, along with delays from the Building Safety Regulator.”
Lord Bailey stressed, “It is imperative for the mayor to be held accountable. His policies have hindered development, delayed progress, and left London residents suffering from escalating rents, soaring home prices, and the harsh reality of being unable to afford to live in the city they cherish.”
