Sales of new homes in London have collapsed to "catastrophic" levels in the worst crisis for the market since "perhaps the early 1990s," a new report warns today.
Preliminary data from respected analysts Molior show just 3,950 new homes were sold in the capital during the first half of 2025.
Revealing the findings on LinkedIn, Molior’s founder and director Tim Craine said the total represented just 9% of the Government’s half-year delivery target of 44,000 homes.
He said: “The market is now as bad as it was in early 2009, perhaps the early 1990s,” he said, adding: “But at least back then the market was allowed to function.”
The London property market suffered a huge crash in the early Nineties on the back of rising interest rates and surging unemployment that saw thousands of buyers cast into negative equity and a massive spike in repossessions.
Craine said the depleted sales numbers had huge implications for the sector: “If developers can’t sell homes, they won’t build them. This means that when the Government resolves the supply-side Building Safety Regulator (BSR) issues, it will still face a significant demand side problem.”
Molior also revealed that private starts have more than halved in the past 12 months with just 731 private homes starting on site in the first half of 2025, down 57% on last year.
Craine said his team had visited 800 development sites with planning permission over the past fortnight and found that construction work started on just seven developments during the second quarter.
Housebuilders have been hit by a “perfect storm” of surging building and financing costs, stagnant sales prices, increased regulation, particularly in relation to new fire safety sign-offs for taller buildings, and planning delays that they say undermine the financial viability of many developments.
Katy Warrick, head of the London residential research team at agents Savills, said: “The perfect storm of market challenges combined with regulatory hurdles has hit the London residential market. And the results are stark.”
Warrick explained that developers “can’t start because their site is either unviable - high build costs, finance costs, planning delays, uncertainty around regulation or exit route - or they have a scheme over 18 metres high and are stuck in the Gateway 2 application process.
“Of the few schemes which did see a start on site this year, an overwhelming majority were schemes below 18m. A couple were also Permitted Development sites, which aren’t required to provide any affordable housing, meaning they are more viable.
“The implications for the sector are immense.”
