Housebuilding in London down 84% in a decade as sales falter

Either the building contractor has gone bust due to rising construction costs, or work is deliberately on hold because the sales market is so weak.

Half of the 37,388 private homes currently under construction in the capital will be complete by the end of 2026, while 13% are halted while part-built and 38% will be completed in 2027 or later.

Sales of new homes have fallen by 68% since 2015, driven by the loss of off-plan investors after 2015, causing construction to decline, as well as the loss of Help to Buy and build-to-rent demand from 2022 onwards.

In the fourth quarter of 2025, London had just 2,463 new home sales. Of these, 1,449 homes were sold to companies, generally at lower price points, such as build-to-rent conversions, private homes being switched to affordable housing and bulk deals. More than 1,000 homes were sold to UK and overseas individuals, generally at higher price points.

Unsold homes also existed across all price points and 15,781 homes need to be sold before 2027. These include 3,897 homes that are complete but unsold and 11,884 unsold homes that are expected to complete during 2026.

The borough with the most homes to sell in 2026 is Tower Hamlets, with 2,536 homes, followed by Richmond upon Thames at 1,624.

However, sales competition will become much reduced from 2027. Currently there are 14,053 homes under construction and due for completion after 2026 and of those, just 7,940 homes are unsold.

The report found significant barriers to entry that have made it hard to become a London housing developer. These include long timelines, expensive construction and scarce customers who demand expertise in sales.

With smaller developers excluded from the industry, the capital will be left with a group of larger developers with limited competition from 2027.

Earlier this week, housing secretary Steve Reed was questioned by the House of Lords’ Built Environment Committee about London’s “collapsing” housebuilding market, with peers pointing out that estate agents and developers on the ground were not seeing signs of a recovery.

Mr Reed insisted the sector was “starting to see some changes”, pointing to the latest housing supply statistics, which show an 18% rise in new build starts in the year to September 2025.

He said: “I was at a dinner on Monday night with loads of developers who were genuinely coming to shake my hand and asking for pictures with ‘build, baby, build’ hats on their heads, telling me how much the market is moving.

“I took that as a pretty good straw in the wind. So I’m confident we’re turning the corner on getting the housing market moving.”