After London’s worst year for housebuilding on record, is the market in meltdown?

Woodberry reservoir, Hackney. Sparkling glass new-builds jostle over the northern curve of the water. Children dash between schools and their homes and an unlikely ice cream van, as needling rain gives way to a burst of sharp late-afternoon sunshine. But follow the path east, over to the three hulking grey council-built towers that make up the Lincoln Court Estate, and the lively din starts to recede. 

Four new housing blocks were due to be here by now, with Hackney council having spent £2.1m planning for them. When I arrive at the red concrete plinths spaced between the existing tower blocks, overlooking the water and just a minute’s walk from the bustling new Woodberry Down development to the north, it’s hard to think of somewhere more suited to build new homes. Each square base is the size of a small car park, its faded hopscotch paintwork the only indication that these strange deckings were once intended as playgrounds for children in the blocks above. But despite these rare pockets of unused land, the project has been paused indefinitely — one of dozens of stalled or cancelled housebuilding projects across the capital. 

London is struggling to build. Actually, that’s an understatement; London’s housebuilding is going through a sheer and sudden collapse. In 2024/5, work started on just 4,150 homes across the entire capital. For reference, the GLA’s annual housebuilding target is 88,000, over 20 times that amount. It wasn’t simply a bad year for housebuilding, but the worst on record since the government began collecting data in 1990 — and no other year even comes close.  

It’s true that housebuilding has slowed right across the country, as increased material costs have kicked in. But nationwide, it’s been a fall of around 30% in two years. In London, that drop is over 80%. In fact, Taylor Wimpey, one of the biggest builders in the country, announced in April that it was no longer going to build flats in London, full stop. So just what has caused this precipitous collapse? And is it all about to get far, far worse?