London’s Housing Market in 2025: What the Data Says
London’s Housing Market in 2025: What the Data Says and Why Prime Phenix Is Building Through It
Published: March 2026 | Category: Market Insights | Reading Time: 5 min
Author: Prime Phenix
What Is Happening in the London Housing Market Right Now?
The London residential property market is at one of the most significant turning points in a generation. At the “Living UK South East” Conference in March 2026, industry leaders, economists, and developers gathered to assess where the market stands and where it is heading.
Prime Phenix attended the conference, and what follows is our honest read of the data, what it means for buyers, investors, and the future of residential development in London and the South East.
The Supply Crisis: How Bad Is It?
London housing starts have collapsed
New housing starts in London have fallen 80% compared to the 2018/19 peak. Private construction starts dropped even further, down 84% from their highest point. This is not a slowdown. It is a structural withdrawal from the market by developers who can no longer make the numbers work.
The reasons are well understood: rising build costs, higher interest rates, increased regulatory requirements under the Building Safety Act, and a stamp duty environment that has squeezed buyer affordability at every price point.
Since 2016, there has been a 48% divergence between construction cost inflation and London flat prices. In plain terms, it now costs significantly more to build a home than the market will pay for it. That gap has forced many developers to pause, reduce ambition, or exit entirely.
Almost nothing is being built to replace what is completed in 2028
Of the 56,700 homes currently under construction in London, 90% will be completed by January 2028. With almost no new large-scale schemes starting in 2025, the pipeline after that date is close to empty.
This is the most important number in the London market right now. The city is not shrinking. Demand is not disappearing. But the supply of new homes is about to fall off a cliff.
Frequently Asked Questions About the London Housing Market
Why are London housing starts falling so sharply?
Several converging pressures have made residential development in London increasingly unviable. These include rising construction costs, high interest rates that make funding taller apartment blocks more difficult, new regulatory requirements under the Building Safety Act (including second staircases), and the cumulative weight of development levies such as CIL and S106. When you add stamp duty increases for buyers and corporate tax pressures for developers, many projects simply cannot stack financially at current land values and sale prices.
How many new homes were sold in London in 2025?
Only 8,436 new homes were sold in London in 2025, far below the government’s annual target of 88,000. This represents what some in the industry have called a “buyer strike,” driven largely by affordability pressures and a shift away from off-plan purchases.
What is happening to rental prices in London?
Rental prices in Inner London and across the M25 ring have risen 25–30% since 2021. While rental inflation has begun to ease slightly, demand for quality managed rentals continues to significantly exceed supply. The structural jobs-to-homes imbalance in London, where job creation consistently outpaces housing delivery, means that rental pressure is not a temporary phenomenon. It is built into the fabric of how the city operates.
Will house prices fall in London in 2028?
The evidence points in the opposite direction. With 90% of current construction completing before early 2028 and almost no new large-scale schemes launching to replace that pipeline, developers who deliver completed homes in 2028 will face near-zero competition from new builds. The scarcity dynamic that typically drives pricing in London’s residential market will be more acute than at almost any point in recent history.
How Buyer Behaviour Has Changed
The conference also presented a clear picture of how buyers themselves have evolved.
64% of all new home exchanges in 2025 were on completed properties, up from just 25% in 2020. This is a fundamental shift. Buyers no longer want to purchase off a floor plan and wait two years for delivery. They want to see the home, walk through it, and move in.
This has important implications for developers. The market is no longer rewarding aspiration. It is a rewarding substance. Well-priced, well-built, completed homes are selling. Schemes with inflated asking prices and long delivery timelines are struggling.
The message from the data is direct: build quality that justifies its price, and deliver it.
The 2028 Opportunity: Why Scarcity Creates Confidence
For a developer with a product ready to deliver in 2028, the conditions are unusually favourable.
- 90% of all current London construction completes before early 2028
- Almost no new large-scale projects were launched in 2025 to replace that pipeline
- Rental demand remains structurally elevated across Inner London and the M25
- Buyers want completed homes, and by 2028, there will be very few to choose from
The greatest unmet demand sits below £700 per square foot, the so-called “missing middle” of the London market. This is where volume meets margin, and where brand trust matters most. Buyers at this price point are not speculating. They are making considered, life-defining decisions. They need a developer they can believe in.
What This Means for Prime Phenix
We did not attend the conference to be reassured. We attended to sharpen our thinking.
What we heard confirmed a direction we have been committed to for some time. While others have paused, we have continued building. Our pipeline of purpose-built residential homes across London, including current developments in Acton, Willesden Green, and West Ealing, is designed precisely for the environment the data describes.
Supply is scarce. Quality is rewarded. The window ahead of 2028 is narrowing.
Prime Phenix’s approach has always been grounded in the same principles: exceptional design, practical living, and homes built for people rather than for financial models. That approach has delivered consistent results across our portfolio, and it is the approach we are bringing to everything in our current pipeline.
We are not reacting to the market. We are building for where the market is going.
Key Takeaways from the London & South East Housing Market Conference 2026
- London housing starts are down 80% versus 2018/19, with private starts down 84% from the peak
- Only 8,436 new homes sold in London in 2025, against a government target of 88,000
- 90% of all homes currently under construction will be completed before January 2028
- 64% of exchanges are now on completed homes, up from 25% in 2020
- Rental prices across Inner London and the M25 are 25–30% higher than in 2021
- The greatest demand sits below £700 per sq ft — the most underserved segment of the market
- Purpose-built residential is forecast to be among the largest UK real estate investment sectors by 2040
Explore Prime Phenix Developments
If you are looking for a new build home in London, designed with care, delivered to the highest standards, and priced for the real world, we would welcome the conversation.
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Prime Phenix is a London-based residential property developer specialising in purpose-built homes across the capital. Our portfolio spans completions in Beaconsfield, Barnet, Hampton Wick, Slough, and Romford, with current developments underway in Acton and Willesden Green.
