Annual housing supply has fallen by 6% in England – highlighting the challenge facing the new Labour government.
Housing starts fell to a net 221,071 in the 12 months to March 2024, down from 234,292 in 2022-23.
In London output fell 9% to 32,162, a nine-year low.
Anna Ward, Knight Frank’s associate in residential development research, said: “These declines reflect the mounting challenges to boosting delivery, including construction capacity constraints and economic pressures stemming from market volatility.
“Addressing this shortfall requires empowering entrepreneurial developers in urban centres as well as traditional greenfield builders.”
Looking ahead, the capital and the South East face the biggest shortfalls compared to Labour’s proposed 370,000 annual target for England.
Charlie Hart, head of development land at Knight Frank, said: “The decline in London and the South East highlights the pressing need for bold policy reform.
“While the UK housing market presents significant opportunities, particularly in our cities, we need to create conditions that attract global investment and support entrepreneurial developers.
“SME developers, who are vital to urban regeneration, have demonstrated their willingness to drive innovative solutions when operating within a supportive framework.
“Creating a more competitive investment environment would help unlock the potential of our cities and boost housing delivery to meet growing demand.
“Looking ahead, policy changes that incentivise development and welcome global capital could transform our urban landscapes and help address housing shortages.”