"Decisive government intervention is needed to support housing demand, and a step-change is essential to create a more affordable and sustainable housing market for Londoners"
- Jacqui Daly - Savills Research
As London’s housing crisis deepens, nearly 300,000 households on median incomes are expected to be priced out of Inner London over the next decade, according to new research commissioned by affordable housing charity Dolphin Living.
The study, carried out by Savills Research, highlights the growing affordability gap that could leave Inner London without enough housing for key workers in healthcare, tourism, education, and the arts. The analysis estimates that the capital will require 200,000 additional workers in these sectors by 2035, yet without appropriate and affordable housing, many may be unable to live where they work.
Population growth is a major contributing factor. London’s population is forecast to surpass 10 million by 2035, with Inner London expected to add 345,000 residents. However, new housing supply continues to fall short. Current projections indicate that only 40% of the government’s estimated housing needs will be met in the capital.
Even if all identified development capacity is delivered over the next decade, 78% of new housing in Inner London will be absorbed by natural household growth, not by improving affordability, according to the research. This means the number of households unable to afford housing in Inner London is expected to rise by 43%, with 1.2 million households priced out of London in total by 2035.
The implications extend beyond housing. “By 2035, 200,000 new workers will be needed in sectors such as healthcare, education and the arts,” said Dolphin Living. “Without new homes, we cannot attract workers to provide crucial services, threatening the pace at which the city’s economy can grow.”
To address this, Dolphin Living is calling for urgent policy changes to protect housing options for median earners, defined as households earning between £45,000 and £90,000, who are not eligible for social housing but cannot afford market rents.
The organisation argues that expanding the supply of intermediate rental homes could offer a practical solution. In addition to easing pressure on affordability, such schemes could help bring forward currently unviable developments while preserving overall delivery of affordable housing.
“As of today, 900,000 households in London cannot afford market housing that meets their needs, yet don’t qualify for social housing, with Inner London alone accounting for 200,000 of those,” said Olivia Harris, chief executive of Dolphin Living. “In ten years’ time, due to population growth, that figure is expected to increase across Inner London by 43%.”
“This means that thousands of new jobs in key sectors like health, education and tourism are likely to go unfilled as median income workers are effectively priced out of the housing market and look to live and work elsewhere,” Harris continued. “The economic impact will be most acutely felt in Inner London, given 73% of those jobs will be within Inner London.”
Harris added, “However, there are solutions, but they involve a change in approach. We need to build more homes for workers on median incomes to support those who currently cannot afford housing that meets their needs as well as the hundreds of thousands of new workers. Homes for intermediate rent for workers on median incomes in Inner London should be a key focus within future housing and economic growth policy.”
Jacqui Daly, director at Savills Research, reinforced the call for structural change. “London’s housing crisis is worsening, with those on lower incomes bearing the heaviest burden,” she said. “There has been a persistent mismatch in the supply and demand of new homes in London. Reduced housebuilding combined with high prices is putting further pressure on already stretched resources and household budgets. Decisive government intervention is needed to support housing demand, and a step-change is essential to create a more affordable and sustainable housing market for Londoners.”
