London isn’t suffering from a lack of housing demand. It’s suffering from a failure to deliver.

New data from Molior underlines the scale of that failure. Just 5,547 private homes broke ground across the capital last year, an 84% drop from a decade ago. Against an annual requirement of roughly 88,000 homes, development has slowed to a trickle. Even with a modest uptick in starts toward the end of 2025, the pipeline remains deeply inadequate: Molior expects only around 14,000 homes to complete in 2027 and 2028 combined, a more than 90% shortfall.

For anyone active in real estate, this isn’t a surprise. Strong structural demand collides with projects that no longer stack up. This isn’t a demand crisis. It’s a viability crisis.

The maths no longer work
Across much of the market, the numbers have shifted decisively against developers. Construction inflation, labour shortages, higher debt costs and regulatory changes, particularly around fire safety and cladding, have pushed budgets up sharply. Planning delays only compound the problem, leaving schemes exposed to months or years of uncertainty.

Crucially, the imbalance is most acute where London needs homes most. Delivery costs increasingly price new-build stock above where the bulk of demand sits. Developers are being asked to produce mid-market housing at prices that only prime-level sales can support. The result is predictable: schemes don’t launch, sites stall and supply quietly dries up.