A new report by Public First finds that meeting London’s target of building 88,000 new homes a year would deliver a step change in economic growth – boosting productivity in the capital by 5.6% in the long term and raising the average Londoner’s take-home pay by £3,700.

Combined with the wider benefits of increased construction activity and consumer spending from lower housing costs, these economic benefits would peak at £40 billion in 2034, equivalent to 6.5% of London’s GDP and 1.6% of UK GDP. The effect would be comparable to adding almost the entire economy of Manchester to UK GDP.

The study comes as government figures show that just 3,990 homes started construction in the year to Q1 2025 – a collapse to historic lows.

Key insights from the report reveal that delivering 88,000 homes annually would:

• Generate more than £14 billion of GVA per year from 2028 through higher construction output – growth equivalent in scale to London’s entire hospitality sector.

• Deliver approximately £600 million of annual rent savings from 2035, helping renters with the cost of living and to save for mortgage deposits.

• Fundamentally transform London’s longer term productivity and economic dynamism, boosting the economy by more than £30 billion a year from 2036.

• Raise significant extra tax revenues, peaking at £6.2 billion in 2034 and strengthening the public finances.

The report calls for decisive action from policymakers to remove the barriers stalling homebuilding in London, including high building costs and viability challenges. Without intervention, the report warns that London risks a lost decade of falling growth and lower competitiveness.

Simon Carter, CEO of British Land, said:

“This report makes clear that London’s housing crisis is not just a social issue but an economic imperative. By unlocking a step change in housebuilding, we can deliver a £40 billion annual boost to London’s economy, support tens of thousands of jobs, and make the capital more affordable for everyone.

“The opportunity is there, but it will require decisive action from policymakers to remove the barriers holding back delivery. If we get this right, the benefits will be felt not just in London, but across the whole UK economy for decades to come.”

Mark Allan, CEO of Landsec, said:

“This report leaves no room for doubt: the crisis of housing delivery in London demands urgent action – and the rewards for doing so are immense.

“If we can hit the ambitious goal of 88,000 homes a year, we can unlock a £40 billion dividend not just for Londoners but for the entire UK economy. For a Chancellor searching for fiscal headroom to finance public services, the prize for getting London building again is inarguable.

“We recognise that some of the policy decisions to deliver are likely to be uncomfortable but the rewards available for bold leadership are crystal clear. The nation needs them. Voters expect them. We hope that decisive action follows.”

The report models the economic impacts of meeting the Mayor of London’s housing target of 88,000 new homes per year by 2028, up to the end of the next parliament. The numbers show the benefits of delivering more new homes against a baseline of 15,000 per year.

The combined economic benefits of higher homebuilding are made up of increased construction activity, agglomeration benefits as a result of a larger housing stock, productivity benefits as a result of London becoming more affordable and more attractive to workers from elsewhere in the UK, and higher day-to-day spending as a result of rent savings. These impacts occur over different time horizons and the combined impact peaks in 2034. All figures are presented in 2025 prices.

The report can be read in full here. It was supported by the Berkeley Group, British Land and Landsec.