London is caught in the “toughest environment for housebuilding” since the 2008 global banking crash, according to Sadiq Khan.
The mayor, in a speech to the annual London Conference, said high interest rates, a rise in construction materials and the lasting impact of Brexit had left “housebuilding on its knees”.
He said the average London house price was “14 times the typical household income”, while someone buying a modest three-bedroom house in Tooting - where he grew up in a council house - “would not see much change from £1m”.
“Anyone claiming the solution lies in cutting back on flat whites or Netflix needs to have a serious reality check,” he said.
It comes two months after the cross-party London Assembly criticised Mr Khan’s own record on housebuilding, with only 2,358 homes started with City Hall funding in 2023-24 – the lowest level since he became mayor eight years ago.
Mr Khan was given £4bn from the previous Tory government and was set a target of starting between 23,900 and 27,100 affordable homes by March 2026.
However, by March, only 1,777 homes had been started. There were also 581 starts “left over” from the mayor’s previous £4.8bn housing deal – making a total of 2,358.
This contrasts starkly with a record 25,658 affordable homes that were started in London in 2022/23.
In his speech on Monday, Mr Khan blamed the previous government for creating a “mess” that had had a “catastrophic effect on housebuilding”.
He has promised to build 40,000 new council homes by 2030. By April, a total of 24,031 council homes had been started in London and 8,862 completed.
Mr Khan toughened the definition of affordable homes when he became mayor.
He was due to tell the conference, hosted by the Centre for London thinktank: “When I first became mayor eight years ago, the number of new genuinely affordable homes being funded by City Hall had fallen to the lowest levels since records began. The cupboard was left bare.
“Since then, we’ve got London building again, with more homes completed in our city than at any time since the 1930s. But we’ve been rowing against the tide of previous governments.
“I want to be honest about the extent of the challenges we now face, and about how only an answer equal in measure to the test will take us from where we are, to where we need to be.
“The mess left by the last government has had a catastrophic effect on housebuilding. Funding for new social housing was slashed.
“Local authority housing and planning budgets were cut to the bone. And the implementation of vital second staircase regulations were botched, slamming the brakes on tens of thousands of homes.
“The truth is, we’re in the midst of the most difficult period for housebuilding in the capital since the global financial crash of 2008.”
According to the assembly’s housing monitor, London needs almost 43,000 affordable homes a year until 2041 to tackle the scale of demand.
A total of 2,055 homes were sold in London in 2022/23 under the right to buy scheme, the highest figures since 2017/18.
More than 13,000 homes have been sold in London under right to buy since Mr Khan became mayor.
Last month, London received an additional £100m for affordable homes in Rachel Reeves’ Budget.
Last year Mr Khan hit a previous Government target of starting 116,000 affordable homes between 2016-23.
However, only about 56 per cent (65,370) have been completed to date.
In 2023-24, a total of 939 council homes were started in London with City Hall funding. More than half of these were concentrated in only four boroughs - Camden, Hackney, Greenwich and Kingston.
Fiona Fletcher-Smith, chair of the G15 group of housing associations and group chief executive of L&Q, said: “Housing associations provide almost half of London’s existing affordable homes, and we are the engine of potential new homes. However, we are currently facing unprecedented cost pressures that mean new supply is grinding to a halt.
“We urgently need innovative funding solutions and a long-term plan from Government to restore our financial capacity and give us the certainty we need to put spades in the ground on new developments.”
