Homebuilding in London has slowed to a near standstill, with just 6,325 private-sector homes breaking ground in the first three months of 2026, according to research by the property consultancy JLL. That figure amounts to about 7% of the mayor's annual target of 88,000 new homes, a shortfall that has alarmed planners and housing campaigners alike.
The consultancy attributed the slowdown to a glut of unsold stock, estimating that some 22,000 properties across the capital are sitting unsold or under construction. Developers, wary of adding to that overhang in a soft market, have grown hesitant to commit capital to new schemes.
Several structural factors are weighing on demand. New-build homes in London cost about 26% more per square foot than comparable existing properties, a premium compounded by soaring service charges and a scarcity of incentives for prospective buyers. Together those pressures have eroded the economics of building at scale.
In response, City Hall has agreed a package of measures with the Ministry of Housing, Communities and Local Government aimed at reviving construction. The most contentious element cuts the affordable-housing requirement that developers must meet from 35% to 20%, a move officials argue will unlock stalled projects but critics warn will deepen the shortage of below-market homes.
The debate plays out against a backdrop of acute housing need in a city where affordability has long been strained. Lowering the affordable threshold may coax more schemes off the drawing board, but it risks trading long-term social housing supply for short-term construction activity.
A handful of large developments are still moving forward, including major regeneration projects in outer London, and supporters say the new measures could help others follow. Whether the changes meaningfully lift starts toward the mayor's target will become clearer as developers weigh their plans through the rest of the year.