London has secured second place in a ranking of 1,000 global destinations, but its housing affordability crisis is significantly undermining its overall appeal to workers and residents.
The latest Global Cities Index by Oxford Economics placed London behind only New York, which also held the top spot in 2025, and ahead of Paris, San Jose and Melbourne.
The index measures a broad range of indicators including economics, human capital, quality of life, the natural environment and political stability across all ranked cities.
London topped the index for human capital and placed eighth in the economics category, reflecting its deep pool of skilled workers and business activity.
The report states that London “has established itself as a perpetually relevant locale for business, science and technology, education, and the arts.”
Its economic strength stems from “the size of the city’s economy (the fourth largest in the world) and the stable growth it has historically experienced,” according to Oxford Economics researchers.
Researchers also noted that “fears that Brexit would lead to a decline of the city as a global financial centre have not been realised,” offering reassurance to those who predicted post-Brexit decline.
The report’s authors expressed confidence that London would retain its global standing, stating: “We expect London to continue to attract migrants from all over the world to access its world-class institutions and range of job opportunities.”
Oxford Economics added that “the city is set to remain a top Global City for years to come, potentially fighting New York for the top spot.”
Despite these strengths, London placed 144th on the quality of life index, falling far behind Paris, Berlin, Amsterdam and New York in that category.
The report found that Londoners spend more as a share of their income on housing than residents of “nearly every city in the world,” a situation it described as “hurting” the city’s quality of life score.
The authors identified the main cause of the affordability crisis as a lack of housing supply, which would take “political willpower and time to overcome.”
Average house prices in London have risen by more than 23 per cent over the past decade, climbing from around £449,000 in mid-2015 to £554,000 in June this year.
According to Moneyfacts, the ratio between average house prices and net income is higher in London than in any major region across England.
The financial data group found that the average home in the capital now accounts for nearly 15 times the average earnings after accounting for stamp duty, national insurance and income tax.
Londoners face double the burden compared to people in the North West and North East when it comes to getting onto the housing ladder, underlining the stark regional divide.
The housing affordability crisis has become one of the defining political challenges facing the Labour government at both a national and local level.
Housing Secretary Angela Rayner told the BBC there was a “slim chance” of Labour hitting its target to build 1.5 million new homes by 2030, describing the pledge as a “stretch target.”
Sir Sadiq Khan, the Mayor of London, has meanwhile missed his own targets to build thousands of affordable homes in the capital, adding further pressure on local leadership.
The Prime Minister announced that London would receive around £6bn of an initial £10bn government cash injection into council housebuilding, signalling a significant push to address the supply shortage.