London Housebuilding Falls to Record Lows as Demand Surges Amid Housing Crisis

Housebuilding in London has entered a critical downturn, with both completions and planning approvals falling sharply, according to the latest industry data.

In the 12 months to June 2025, 30,000 homes were completed in the capital, measured by new energy performance certificates. This represents a 12% drop compared with the previous year and is well below the 2019/20 peak.

Planning permissions have also fallen to their lowest level since records began in 2006. Only 966 projects were approved across London in the past year, while the number of new housing sites starting has declined by 38%.

London is expected to deliver 440,000 of the government’s 1.5 million new homes target by 2030. Current output, however, falls far short of requirements. To meet demand, the capital would need to deliver 88,000 homes annually, an increase of 175% on present levels.

The slowdown has significant implications for affordability. Londoners now face a house price-to-earnings ratio of 11, compared to the national average of 7.7. Average deposits equate to nearly seven times annual post-bills income, with first-time buyers in the capital accounting for just 15% of purchases in 2023/24, down from 25% a decade ago.

Meanwhile, the proportion of households renting privately has more than doubled over the past 20 years, while the share of mortgaged households has dropped from 39% to 25%.

London’s housing crisis continues to place pressure on the construction sector, with stalled developments, falling investment in new sites and growing challenges in planning approvals shaping the outlook for the decade ahead.

The figures highlight a structural challenge in London’s housing delivery. Without urgent reform, the capital will continue to fall short of its housing targets, placing further pressure on affordability and increasing reliance on the private rental sector. To reverse the trend, streamlining planning approvals, unlocking stalled sites and aligning local policies with national housing objectives are essential. 

For the construction industry, these changes are critical: faster approvals, reduced bureaucracy and targeted incentives would unlock investment and allow builders to deliver the homes London urgently needs. The message is clear, London’s housing system cannot remain in its current state if the capital is to meet demand and support a thriving construction sector.