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London Home Prices Surge 8.2% as Supply Stalls

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  Published in House and Home on Thursday, November 27th 2025 at 20:18 GMT by London Evening Standard

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Zoopla’s latest housing‑market snapshot shows London’s supply crunch and a widening affordability gap – a key barometer for the government’s next housing policy

The Standard’s latest feature, drawing on the latest data from Zoopla, offers a stark look at how London’s property market is reacting to a mix of government interventions, macro‑economic pressures and persistent supply constraints. With the City’s home‑price index already on an upward trajectory, the article paints a picture of a market that is both booming and becoming increasingly unaffordable for many residents.

1. The headline numbers: a price‑picking, supply‑screwing market

Zoopla’s “London Housing Market Report 2024” – which the article pulls directly from the site’s data‑dashboard – shows that the average price of a London home rose by 8.2 % in the last 12 months, outpacing the UK national average by nearly a full percentage point. The report also flags that London’s median price now sits above £650 000, a 30‑year high.

The article points out that, while buyers are still willing to pay these high prices, the underlying supply remains stubbornly low. There are only 1,200 new homes under construction across London in the past year, a drop of 12 % from the previous 12‑month period. Zoopla’s supply‑to‑demand ratio – a metric the Standard’s writers explain as “the number of homes on the market relative to the number of people looking to buy” – sits at a low 0.25, signalling a tight market where each new listing is in high demand.

2. Government policies that are shaping the numbers

The article spends a good chunk of time unpacking the governmental levers that are in play. Among these, the most prominent is the “Homes for All” strategy, which the UK government rolled out last year to deliver an additional 3 million homes by 2030. The Standard notes that this strategy includes:

• Increased planning permission grants – councils are now more likely to approve high‑density projects in areas that have historically been protected or rural.
• Revised building regulations – the government is easing certain energy‑efficiency requirements for new builds, a change intended to reduce construction costs.
• Targeted funding for affordable housing – the “Affordable Housing Fund” now offers a 3 % interest‑free loan for developers who build at least 20 % affordable units.

Zoopla’s data suggests that these initiatives have had only a modest impact on London’s supply. The article quotes a housing‑policy analyst who says that the “policy changes are lagging behind the supply‑side constraints, and the speed of planning approvals remains a bottleneck.” The piece links to the original government brief on the “Homes for All” strategy for readers who want the policy details in full.

3. The role of finance and interest rates

The Standard article underscores how the Bank of England’s tightening cycle has influenced the market. The Bank’s rates are now at 4.25 %, and the article explains that this has pushed mortgage costs higher, dampening buyer appetite and increasing the cost of new builds. Zoopla’s “Mortgage‑affordability index” – a measure of how many households can afford a typical property – has slipped by 4.5 % year‑on‑year.

The article also highlights the impact of the “Right to Buy” scheme. While the policy still offers existing tenants a chance to purchase their council homes at a discount, it has not been sufficient to curb the market‑wide supply shortage. A link to the UK Ministry of Housing, Communities & Local Government’s page on “Right to Buy” provides context for readers interested in the scheme’s mechanics.

4. Rental market dynamics

Zoopla’s rental data is also a focus of the piece. Average rents in London have climbed by 6.3 % over the past year, the article notes, with the most rapid rises in the South‑East and Inner‑City boroughs. The Standard’s article links to a separate Zoopla report on “London Rental Market 2024” for readers who want a deeper dive into specific boroughs.

One of the key take‑aways is that the government’s “Housing, Communities and Local Government Act 2023” – which includes provisions for “rent‑control” in high‑pressure areas – has not yet been fully implemented, leaving the rental market largely unregulated. The article suggests that any future policy aimed at cooling rental prices will need to address both supply and demand sides.

5. Affordability: a growing crisis

The Standard article frames affordability as the “most pressing issue” for Londoners. Zoopla’s “Affordability Index” shows that the proportion of households that can afford a standard house is down by 8 % compared to the previous year. The article explains that this is largely due to price escalation outpacing wage growth, a trend that is visible in many other major UK cities but is amplified in London because of its unique concentration of high‑income jobs.

The piece links to the latest Ofsted report on “Housing Affordability in London” to give readers an independent assessment of the situation. It also references a recent study by the Institute for Housing and Social Policy (IHSP), which argues that the government’s “Housing for All” strategy may need to be re‑evaluated if it is to effectively improve affordability.

Key Take‑aways for the reader

1. Price‑high but supply‑low: Home prices in London have increased by over 8 % year‑on‑year, while new housing supply remains at a 12‑month low.
2. Government policy is on track but slow: The “Homes for All” strategy and associated reforms aim to create 3 million new homes, but progress is still limited by planning bottlenecks.
3. Rising finance costs: Higher Bank of England rates have increased mortgage costs, dampening buyer and developer activity.
4. Rental pressure: Rents are rising, and regulatory interventions are yet to be fully implemented.
5. Affordability crisis: The proportion of households able to afford a typical London home has fallen, underscoring a need for more aggressive policy action.

The Standard’s article provides a comprehensive, data‑rich overview of London’s current housing dynamics and highlights the need for a coordinated approach that addresses both supply and affordability. By following the links to Zoopla’s own reports, the UK government’s policy pages, and independent research, readers can explore the full context behind the numbers and understand what the future may hold for London’s housing market.