A 16% rise in London house prices is not a forecast from the Mayor or a change already seen in the market. It is a conditional estimate by Pegasus Group: the consultancy says a roughly 300,000-home gap between assessed need and the draft plan target could correspond to prices around 16% higher than in a scenario where those homes were delivered, assuming a particular relationship between housing supply and prices and no other changes.
What does the 16% estimate actually say?
Pegasus Group’s 1 October 2026 analysis compares the draft plan’s 558,000-home target with an approximately 850,000-home need figure cited by the Greater London Authority (GLA). The difference is 292,000 homes, or around 300,000. Pegasus says that gap is 7.8% of London’s approximate 3.9 million dwelling stock, and applies an assumed relationship in which a 1% increase in housing stock corresponds to a 2% fall in house prices, with other factors unchanged. That produces an estimated price difference of about 15.6%, rounded to 16%.
The consultancy illustrates the percentage using its £527,000 average London house-price figure, translating 16% into about £82,000 and a resulting price above £600,000. These are Pegasus’s calculations, not a recorded price rise or a forecast that every London home will become that much more expensive. Read Pegasus Group’s analysis and methodology for its account of the assumptions.
Why the model is not a guaranteed outcome
The calculation isolates a supply change and holds everything else constant. Actual prices also respond to factors such as interest rates, incomes, migration, household formation, demand, other construction and policy. The result therefore describes a hypothetical comparison, not what prices will necessarily do under the draft plan. Pegasus Group’s 1 October 2026 analysis does not include an independent replication of its 16% calculation, so the figure should be attributed to the consultancy.
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How does the draft target compare with housing need?
| Figure | What it refers to | Source |
|---|---|---|
| 558,000 homes | Draft London Plan target for 2027–2036 | GLA, 2026 Draft London Plan, published 16 July 2026 |
| 850,000 homes | Government housing-need figure the GLA says the plan aims to meet as soon as possible in the following decade | GLA, 2026 Draft London Plan |
| Around 300,000 homes | Pegasus’s characterization of the gap; the arithmetic difference between 850,000 and 558,000 is 292,000 | Pegasus Group, 1 October 2026 |
The target and need figure are not interchangeable: the 558,000 is the proposed first-decade plan target, while 850,000 is the need benchmark the GLA says it seeks to meet as soon as possible in the subsequent ten-year period. Some news coverage compares 558,000 with 880,000; Mortgage Introducer used that figure in its 5 October 2026 report. The GLA draft instead cites 850,000, so the figures should not be presented as if they were the same measure.
The GLA describes its target as capacity-derived and calls it “the most ambitious approach possible in the context of land and environmental constraints, and deliverability limitations in the shorter term.” The draft prioritises brownfield sites but says brownfield alone cannot meet long-term need. It allows consideration of limited Green Belt release where evidence supports it and public benefits are delivered, including conditions relating to transport, affordable housing, infrastructure, biodiversity and green-space access. These planning choices explain the target’s context; they do not establish Pegasus’s price estimate.
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Is the 2026 London Plan final?
No. The Mayor published the draft on 16 July 2026, and the GLA says consultation runs until 15 October 2026. After consultation, the draft is due to undergo an independent Examination in Public; adoption is expected in early 2028. The target and policy details could therefore change before the plan is adopted.
See the GLA draft housing chapter for the target and need framing, and the GLA announcement of the draft and consultation timeline.
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What does this mean for London buyers?
The 16% figure is a warning about one possible long-term cost of constrained supply, not a reliable way to predict a buyer’s future price or mortgage payment. Pegasus also cites a 2025 median affordability ratio of 10.61, based on Office for National Statistics data, as evidence of London’s existing affordability pressure; that statistic describes affordability, not the effect of this draft plan.
For a household making a buying decision, the relevant price, deposit and borrowing capacity depend on its location, property and finances. The draft plan alone cannot tell a buyer what a particular home will cost, whether prices will rise, or how much they may be able to borrow. Chris Wheaton, Pegasus Group’s Senior Economics Director, told Mortgage Introducer that “Persistent supply shortages continue to place upward pressure on house prices and borrowing costs.” That is his view, not a government finding.
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For wider context on the reported economic implications, see Estates Gazette’s coverage of Pegasus’s estimates.
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