Soaring housing costs—not a shortage of homes—are at the core of the crisis in London, according to a new report by the Centre for London.
The study challenges the long-held assumption that the city’s housing challenges are primarily due to insufficient supply, arguing instead that affordability and unequal distribution of housing are the real drivers.
House Prices Outpacing Earnings
Drawing on data from the Office for National Statistics and the Greater London Authority, the report found that house prices in London have risen significantly faster than incomes over the past two decades.
While the number of homes relative to population has remained largely stable, affordability has sharply deteriorated.
• In 2002: ~421 homes per 1,000 people
• Today: Similar levels despite population growth
• Homes per household: Increased slightly to about 1.1
A Distribution Problem, Not a Supply Crisis
According to research director Rob Anderson, the issue lies in how housing is owned and used.
He noted that:
• More homes are concentrated in fewer hands
• Properties are often rented at high prices, left vacant, or treated as investment assets
• Foreign investment is contributing to price inflation
“Home ownership is now 270% more expensive than it was in 2002,” Anderson said, highlighting the widening affordability gap.
Rising Rent Burden
The report also shows that private renting has become more dominant, with tenants facing increasing financial pressure.
• Rent now consumes about 42% of average renter income
• Access to private housing has declined despite increased availability
At the same time, the supply of social and affordable housing has significantly reduced, worsening inequality.
Policy Gaps and Structural Drivers
The think tank argues that broader economic and policy factors—including taxation, investment patterns, and housing tenure shifts—are often overlooked in discussions about the crisis.
It describes London’s housing situation as a “winner-takes-all” system, where market forces disproportionately benefit investors over residents.
Proposed Solutions
The report recommends a multi-layered policy response, including:
• Expanding private housing supply
• Increasing delivery of social and affordable homes
• Addressing demand-side pressures such as speculative investment
• Introducing measures like rent controls and low-interest financing for housing associations
Political Debate Over Rent Control
Sadiq Khan has repeatedly called for rent control powers as part of broader housing reforms.
However, both Conservative and Labour governments have opposed the move, arguing it could discourage investment and reduce housing supply.
