A new report by Public First reveals that achieving London’s ambitious target of building 88,000 new homes annually could transform the city’s economy, increasing productivity by 5.6% and raising the average Londoner’s take-home pay by £3,700 in the long term. Sponsored by the Berkeley Group, British Land, and Landsec, the report highlights that meeting this goal would generate substantial economic, social, and fiscal benefits for both London and the wider UK.
According to the study, the combined effects of increased construction activity, consumer spending, and reduced housing costs could deliver a £40 billion economic boost by 2034—equivalent to 6.5% of London’s GDP and 1.6% of UK GDP. The report compares this impact to adding the entire economy of Manchester to the UK’s GDP. However, it comes at a time when official data shows housing starts in London have fallen dramatically—just 3,990 new homes began construction in the year to Q1 2025, marking a historic low and highlighting the scale of the challenge.
The report outlines several key outcomes of achieving the housing target:
- Economic output: From 2028, London could generate over £14 billion in annual Gross Value Added (GVA) through expanded construction activity—an economic boost comparable to the city’s entire hospitality sector.
- Housing affordability: By 2035, Londoners could save about £600 million a year in rent, easing the cost-of-living burden and enabling more people to save for home ownership.
- Productivity and growth: From 2036 onward, London’s economy could grow by over £30 billion annually, reflecting a sustained increase in long-term productivity and competitiveness.
- Public finances: Additional tax revenues are projected to peak at £14.6 billion in 2034, strengthening the UK’s fiscal position and creating new room for public investment.
The report urges urgent action from policymakers to remove structural barriers that hinder homebuilding, such as high construction costs, restrictive planning rules, and viability challenges. Without decisive intervention, it warns that London could face a “lost decade” marked by stagnation in housing delivery, declining economic competitiveness, and worsening affordability.
Simon Carter, CEO of British Land, emphasized that the housing crisis is not only a social issue but also an economic one. “By unlocking large-scale housebuilding, we can deliver a £40 billion annual boost, create thousands of jobs, and make London more affordable,” he said. Carter stressed the need for bold policymaking to unlock stalled development and deliver long-term prosperity for both the capital and the wider UK.
Mark Allan, CEO of Landsec, echoed the call for leadership, stating that the crisis in housing delivery “demands urgent action—and the rewards for doing so are immense.” He noted that reaching the 88,000-homes-per-year target could “unlock a £40 billion dividend not just for Londoners but for the entire UK economy.” Allan also pointed out that, for a government seeking fiscal growth and stability, revitalizing homebuilding in London presents “an undeniable opportunity.”
The Public First report models the economic impact of meeting the Mayor of London’s housing target through 2028 and beyond, comparing it with the current baseline of just 15,000 homes per year. The analysis attributes potential gains to several interconnected factors: increased construction output, stronger agglomeration effects from a larger housing stock, improved productivity as London becomes more affordable and attractive to workers, and higher day-to-day consumer spending driven by rent savings.
Overall, the findings send a clear message: scaling up homebuilding in London is central to the city’s—and the UK’s—economic future. Achieving the 88,000 homes per year target would not only help resolve the capital’s housing crisis but also unlock tens of billions in economic growth, strengthen public finances, and lay the foundation for long-term national prosperity.
