New research suggests that London's housing crisis is not primarily a supply issue but rather one of affordability. The Centre for London's findings indicate that the number of homes per person has remained stable over the past two decades, yet house prices and rents have soared, making housing increasingly unattainable for many residents.
Stable Supply, Collapsing Affordability
The study reveals that in 2024, London had approximately 421 homes per 1,000 people, similar to the ratio in 2002. Despite a population growth of nearly a third, the number of dwellings per household has actually increased slightly, from around one to just over 1.1. However, the house price-to-income ratio was 70% higher in 2024 than in 2002, with peaks of up to 100% higher in 2021-22.
Rob Anderson, Research Director at the Centre for London, explained: "While housing availability in crude terms has been stable, affordability has collapsed. Part of the reason is that expansion of the housing stock has a limited effect on affordability in the aggregate."
The Impact of Tenure Mix
The research highlights significant changes in London's tenure mix over the last two decades. There has been a decline in social and affordable housing, while private renting has become more common. Home ownership is now 270% more expensive than in 2002, and private rents consume an average of 42% of renters' incomes.
Anderson noted: "London has experienced a deepening crisis of housing distribution – driven by demand-side factors and changes in tenure mix – as much as one of overall housing supply. The availability of social and affordable housing has collapsed, while private housing has become less accessible due to price inflation relative to incomes."
Policy Implications
Both the previous Conservative and current Labour governments have emphasized mass housebuilding as a solution. However, the Centre for London argues that simply building more homes will not solve the crisis. To have reduced house price growth by 30% between 2002 and 2024, London would have needed to add nearly one million extra dwellings, doubling the rate of stock expansion.
The research suggests that addressing affordability requires a multi-pronged approach:
- Accelerating private market supply while expanding social and affordable housing delivery.
- Addressing demand-side issues such as foreign investment and rapid rent increases.
- Implementing rent controls and providing low-interest loans to housing associations for building social homes.
City Hall has faced criticism for agreeing to reduce affordability quotas for developers from 35% to 20% in a bid to boost construction. The Centre for London warns that without tackling distribution and demand factors, the housing crisis will persist.
