The total net completions are expected to reach 46,500 this year, significantly higher than the 42,000 homes a year target set by the London Plan.

The real estate services provider estimated that 58% of demand is for homes costing under £450 per sq ft.

However, only 15% of the five-year demand forecast is met by future supply.

Savills claimed that in order to reach the level of development needed and shift the focus to the lower-value end of the market, policy intervention is required.

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It also estimated that the number of unsold, completed homes will total 2,800 this year, up from 1,000 last year and found that there were 1.6 starts for every sale above the £1,000 per sq ft price point.

“To a large degree, the fact that London almost hit its official new homes target last year should be seen as a massive success, but these figures suggest we are at the limit of what can be built under the current delivery model,” said Edward Green, research analyst at Savills.

“This year may present some harsh realities for a number of developers, but the bigger issue remains that of a city chronically undersupplied in the homes it desperately needs.

“An additional model for housing delivery is needed that adds to the output of major housebuilders and the market sales model.”