Labour won’t hit housing target – Savills

Labour will miss its goal of delivering 1.5 million new homes by 2028/29, with property experts Savills forecasting just 840,000 completions over the next five years.

The big gap highlights challenges in boosting demand and overcoming construction constraints, despite recent planning reforms.

According to Savills, the supply of consented land is expected to rise due to streamlined planning processes, but this will not quickly translate into more homes.

Low demand from private buyers, private landlords and social housing providers is a major hurdle, as developers require strong market confidence to build.

More support is needed

Dan Hill, from Savills’ research team, said: “Based on current policy and trends, housing completions are likely to remain low, between 160,000 and 170,000 per year over the next few years.

“While it is possible to exceed this, demand support would be needed.

“Even with this, delivery will be constrained by the speed at which the housebuilding sector can expand its supply chains and labour force.”

He added: “This means completions are still likely to fall short of the Government’s target.

“At most, we think very significant demand support could push completions to 1.2 million new homes by March 2029.”

Completions continue falling

Housing completions have already declined, dropping 6.5% to 198,600 homes in the year to March 2024, largely due to the end of the Help to Buy scheme in 2023.

Savills estimates a further fall to 180,700 homes in 2024/25.

Even with substantial demand support, Mr Hill suggests completions could reach only 1.2 million by March 2029, still short of the government’s target.

The firm’s research shows that private market sales are projected to hover around 100,000 annually, representing about 10% of total housing transactions — a figure consistent over decades.

Rates hit BTR starts

The Build to Rent sector, which hit a record 18,100 completions in 2023/24, is also facing setbacks.

Higher interest rates have led to a 59% drop in starts, from 25,700 in 2022 to 10,600 by March 2025.

This decline is expected to reduce completions until borrowing costs ease.

Affordable housing, a critical avenue for rapid delivery, is constrained by financial pressures on Housing Associations (HAs).

New investment is down

Higher costs for maintaining existing properties, coupled with reduced rental income and rising construction expenses, have limited investment in new projects.

Savills says that affordable housing starts fell 39% in the year to March 2024, with an 88% plunge in London.

Even with funding, the housebuilding sector faces workforce shortages and supply chain which will restrict the industry’s ability to scale up.

Historically, housebuilding has grown at an average of 7.7% annually during expansion periods, with peaks of 15.7% in the mid-2010s under Help to Buy.

If this peak rate were sustained for four years, an additional 350,000 homes could be built by 2028/29, bringing total completions to around 1.2 million.