Report

Fixing London housing

This report from UK think tanks Onward and the Centre for Policy Studies brings renewed focus to London’s housing crisis and the consequences of failing to address it.

London is failing to build the homes it needs. In 2024/25, construction started on just 4,170 homes in the capital, even as the population grew by close to 100,000. This dramatic fall in starts means that London is facing its largest housebuilding challenge since the Second World War.

This has been caused not just by global economic forces, but by policy choices that have increased construction costs, restricted the land that can be built on, and added more regulatory hurdles to clear.

London has not built anywhere near the Government’s target of 88,000 new homes a year since the 1930s. Resolving London’s shortage by bringing the cost of housing closer to the cost of construction will require around 1.85 million additional homes, or roughly 100,000 a year over two decades.

This is achievable: cities like Tokyo and Austin already match or exceed that on a per-capita basis. But the consequences of failure are severe.

By the ONS’s definition of affordability, a household on the median London income cannot afford any property in the capital. House prices in London have risen 7.5 times faster than inflation since 1970. London’s failure to build is also raising house prices across the South East. This failure has national impacts: Public First estimates that meeting the 88,000 target would generate £14.8bn in annual GVA and over £6bn a year in additional tax receipts by 2034, enough to fund significant tax cuts.

For the Conservatives and Reform, the political logic points the same way. London is the region with the strongest local support for new building (59% in favour, 14% opposed) and inner London has relatively low centre-right support. The political cost of unlocking supply is therefore lowest precisely where the need is greatest. There is, in short, an unanswerable case for both parties to make a major London housebuilding programme central to their next manifestos.

This report sets out the case for such a programme, and a detailed prescription of how it could be delivered, along with clearly delineating which existing powers can be used and where they sit.