London’s new-build sector has collapsed over the last decade, falling by as much as 84% as construction costs soar, new-home sales slump and contractors go bust.

New research from residential development research firm Molior found construction began on just 5,547 new private-sector homes in 2025, down from 33,782 in 2015. Despite London needing around 88,000 new homes a year, the findings raise fresh questions over whether current delivery can get anywhere close to what ministers expect from the Capital.

Difficult to devastating

London Assembly Member Lord Bailey (pictured) said the situation had gone from “difficult to devastating”, adding that “ordinary Londoners are suffering the most.

“This is not just a housing crisis anymore, it is a crisis of stability, opportunity and dignity.”

Bailey added, “I warned years ago that the mayor’s approach would lead to a collapse in housebuilding. Sadly, that is exactly what has happened.”

According to Molior, 18,326 homes are expected to be completed in London by the end of this year, around half of those currently under construction. A further 14,053 homes are not expected to be completed until 2027 or later, representing just 8% of the Government’s 176,000-home two-year target for London – a 92% shortfall.

Sadiq (Khan) is doing everything he can to deliver more homes of all tenures.”

Construction has also been halted on 5,009 homes across 51 development sites, with Molior suggesting this may be due to high construction costs forcing contractors out of business, or developers holding schemes back in a weak sales market.

The firm found 8,436 new homes were sold in London during 2025, which it said was “directly contributing to fewer construction starts”. It added that meeting national targets would require “at least 22,000 homes” to be sold each quarter.

A spokesperson for the Mayor of London told the BBC: “Tackling our urgent housing crisis is a top priority,” adding that “Sadiq is doing everything he can to deliver more homes of all tenures.”