Mayor of London Sadiq Khan has said the capital is beginning to see a recovery in housebuilding, pointing to a sharp rise in new-build starts and an increase in completions despite what he described as the toughest development conditions since the 2008 financial crisis.
Khan said new figures for April to June 2026 showed 16,290 new-build homes were started in London, up 298%, while 18,050 homes were completed, an increase of 9%.
He said:
“We’re starting to turn the tide on homebuilding, despite the toughest conditions since 2008.”
Khan added:
“Still a long way to go, but we’re making progress.”
Housing sector has faced severe pressures
London’s housing market has been hit particularly hard by higher construction costs, borrowing costs and viability pressures, with more complex developments in the capital often requiring substantial upfront finance.
Khan has previously argued that higher interest rates and rising development costs created a “perfect storm” for London housebuilding, particularly for larger schemes in inner and central London.
The latest rise in starts is therefore likely to be welcomed at City Hall as evidence that activity is beginning to recover from a very weak base.
Affordable housing remains a major challenge
The wider picture nevertheless remains difficult.
The London Assembly’s 2026 Affordable Housing Monitor found that the Mayor’s 2021-26 Affordable Homes Programme delivered 14,335 starts by March 2026, below its revised target of between 17,800 and 19,000.
Nearly four in five of the affordable homes started under that programme were for social rent, but the Assembly warned that overall supply continues to fall well short of the scale of housing need in the capital.
£11.7bn programme for the next decade
Khan is now looking to the new London Social and Affordable Homes Programme 2026-36, backed by up to £11.7 billion of government funding, to accelerate delivery over the coming decade.
The programme is intended to support thousands of additional social and affordable homes, with formal delivery targets to be agreed following the initial bidding process.
Khan says recovery must continue
The Mayor’s latest figures suggest a significant quarter-on-quarter improvement in overall construction activity, although sustained delivery over several years will be needed to close London’s housing shortage.
Khan’s argument is that the capital is beginning to move in the right direction - but with affordability pressures still acute and previous targets missed, the test will be whether the increase in starts can be sustained and translated into completed homes Londoners can afford.
