The Construction & Capital Podcast

London's housing market has split in two, and most property developers are reading only half the story. In this episode of the Construction Capital podcast, we unpack the data, the policy, and the capital stack reality shaping development opportunities across Greater London in 2026.

The headline numbers are stark. London's average house price is down 3.3% year on year to £542,000, the seventh consecutive month of annual falls and the weakest performance of any English region. Just 3,248 private homes were started across all 33 boroughs in the first nine months of 2025, an 84% collapse versus a decade ago. Molior's latest analysis confirms it is now unviable to build profitably across the half of London trading below £650 per square foot, leaving 162,000 of the capital's 281,000 unbuilt consented homes effectively undeliverable on current economics.

But beneath those headlines, a very different market is taking shape. Outer London is quietly outperforming. Walthamstow is up 5.9% year on year. Redbridge is up 5.3%. Bromley is up 3.0%. Croydon is up 2.5%. The Elizabeth Line, Overground extensions and PTAL uplift are reshaping micro-market dynamics, and the boroughs with the right transport connectivity are where day-to-day development business is actually getting done.

This is the most comprehensive single briefing on Greater London's development finance market available right now. Built specifically for property developers, land buyers, capital partners and investment professionals operating in the capital.

What we cover in this episode:

The bifurcation of the London market and what it means for site acquisition strategy. Sold price data borough by borough, including the 11.2% fall in Kensington and Chelsea and 10.8% drop in Westminster against the gains in outer London. Why the £650 per square foot viability threshold is now the single most important number in London development. The full impact of the December 2024 NPPF reforms, the second NPPF consultation that closed in March 2026, the Planning and Infrastructure Act 2025 and the Mayor's emergency housebuilding package, including the new Time-Limited Planning Route at 20% affordable housing by habitable room. Current development finance pricing across senior debt, stretched senior, mezzanine, bridging and equity, with all-in rates clearing in the 6.5% to 9.5% range following the Bank of England's December 2025 cut to 3.75%. Where lender appetite is strongest in 2026, including PBSA, build-to-rent, co-living, care and senior living, and where the open-market for-sale conversation is hardest. The three categories of scheme genuinely moving forward in London: large regeneration platforms in Opportunity Areas, outer-borough intensification around well-connected brownfield, and selective grey belt release. Why the next twelve to eighteen months represent the best structural window for London development capital since 2022.

Episode chapter

The two numbers that define London development in 2026 
Prime Central London versus the outer boroughs 
The viability crisis: why half of London cannot be built 
Housing targets, the new London Plan and the delivery gap 
NPPF reform, the Planning and Infrastructure Act and the Mayor's emergency package 
Development finance pricing, leverage and the lender pool 
Sector appetite: PBSA, BTR, co-living, care and for-sale 
Where the schemes are actually moving forward 
Outlook for the next twelve to eighteen months

Key data points referenced:

London average house price February 2026: £542,000, down 3.3% year on year. 
Greater London median across 51 principal towns: £540,000 over 85,580 transactions. 
New-build completions: 1,586, just 1.9% of total activity. 
Private housing starts January to September 2025: 3,248. 
Unbuilt consented homes: 281,000. 
Viable above £650 per square foot: 119,200. 
Affordable starts 2024 to 2025: 4,522, down from 26,386 two years earlier. 

The Mayor's draft new London Plan target: 880,000 homes over ten years from 2026, or 87,992 per year. 
Bank of England base rate: 3.75%. 

Senior development finance: from 6.5% per annum at 65% to 70% LTGDV. 
Mezzanine: from 12% per annum, stretching gearing to 85% to 90% of cost. 
Bridging: from 0.55% per month at up to 75% LTV. 
UK BTR investment 2025: £5.3 billion, a record. 
London BTR starts: down 93% between 2022 and 2025. 
London PBSA pipeline: 14,600 beds under construction, the largest of any UK city.

Major schemes and locations referenced:

Old Oak and Park Royal, with its 24,000 home ambition and the Compulsory Purchase Order secured in September 2025. Royal Docks with 36,000 homes and the DLR extension to Thamesmead. Earls Court, approved by Hammersmith and Fulham in November 2025 and Kensington and Chelsea in December 2025. Meridian Water in Enfield, Canada Water in Bermondsey and Southwark, and Brent Cross Cricklewood in Barnet.

Outer borough opportunities referenced include Barking, Bexley, Havering, Sutton, Hounslow, Ealing, Hillingdon, Harrow, Wembley, Tottenham, Lewisham, Woolwich, Stratford, Ilford and Leytonstone.

Inner London market commentary covers Mayfair, Marylebone, Notting Hill, Camden, Kentish Town, Hampstead, Highgate, Islington, Hackney, Shoreditch, Whitechapel, Tower Hamlets, Canary Wharf, City of London, Battersea, Wandsworth, Clapham, Brixton, Vauxhall, Richmond, Wimbledon, Merton and Kingston.

Resources referenced in this episode:

Explore the full Greater London property market data, including median prices, transaction volumes and year-on-year movement across all 51 principal towns.

For the in-depth price analysis, full charts, data tables, development finance benchmarks and viability modelling referenced throughout this episode: Greater London Property Market Report 2026.

To explore Construction Capital's full development finance proposition, including senior debt from 6.5%, mezzanine from 12%, bridging from 0.55% per month, refurbishment finance and equity and JV structures: visit constructioncapital.co.uk.

About Construction Capital:

Construction Capital is an independent UK property finance brokerage and capital advisory firm. Founded by Matt Lenzie, with 25 years of property finance experience, the firm arranges development finance, mezzanine, bridging, equity and joint venture structures for property developers across Greater London and the wider UK. Construction Capital works with a panel of 100+ lenders, including high street banks, challenger banks, specialist debt funds, family offices and institutional capital partners.

To discuss a live scheme or get indicative terms within one working day, enter the Deal Room. Or call +44 20 3816 3693.

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