​London remains the powerhouse of the UK economy, accounting for around 24% of national output. Forecasts suggest the city could add nearly 395,000 new jobs by 2029, underlining its continued appeal to global businesses and talent. However, this growth potential is being constrained by a serious shortfall in housing and workspace delivery.

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The Greater London Authority’s target of around 88,000 new homes per year over the next five years highlights the scale of ambition required - but current delivery sits at under a tenth of that figure. Affordability is another pressing concern: while over 75% of London residents can afford homes priced under £700 per square foot, only 47% of new homes built in the past five years fall within this range. This mismatch leaves many essential workers priced out of the city they help sustain.

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Commercial development is also slowing. In early 2025, office starts across central London fell by 26% compared to late 2024, and completions projected beyond 2027 are tracking below long-term averages. This means not only a housing shortage but a potential shortfall of modern, sustainable workspace to support the city’s expanding employment base.

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Much of London’s development activity remains concentrated in central areas - where job density is highest and transport links strongest - but this has driven costs up and affordability down. By contrast, outer London offers greater land availability and lower prices, but weaker transport and infrastructure connections make large-scale growth difficult. Unlocking opportunity in these areas will depend on targeted investment in rail, utilities and local services.

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Major transport projects such as the proposed Bakerloo Line extension to Thamesmead (which could enable up to 50,000 homes and 20,000 jobs) and the HS2 interchange at Old Oak and Park Royal (potentially 25,500 homes and 56,000 jobs) demonstrate what joined-up infrastructure and housing delivery can achieve. Yet many such projects remain unfunded or uncommitted, limiting progress.

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Financial viability also presents a barrier. The costs of meeting modern building standards and sustainability goals, alongside rising interest rates and land values, can make residential schemes less attractive to developers. As a result, sites with strong potential often remain underused or shift towards higher-value commercial uses. Supporting smaller developers and diversifying delivery models could help unlock more affordable housing.

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Addressing these challenges will require strong coordination between the public and private sectors. Efforts should focus on identifying deliverable sites, prioritising infrastructure investment, and ensuring that new housing includes a balanced mix of price points. Long-term planning, clear policy direction and financial collaboration will be essential to sustaining confidence and delivery.

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London’s ability to thrive depends on aligning its housing, jobs and infrastructure. The city has the scale, talent and global standing to continue leading the UK’s economy, but delivery has not kept pace with demand. Without a renewed focus on affordability, transport connectivity and viable development, London risks losing its competitive edge and pricing out the very workforce it relies on. Unlocking the capital’s potential is not simply about building more - it is about building smarter, ensuring that growth remains inclusive, sustainable and economically resilient.

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Sources: Savills