Labour’s plan to build 1.5 million new homes by 2030 is being “destroyed” by the decline agreed by the plan, according to a report from Investec.
Last year, only 241,000 housing units received program permits in England, down 3% from 2023, suggesting research by experts bank.
The shortage is particularly severe in the southeast, with London facing a large housing gap, with only 32,160 homes being offered in 2023, “less than half of the estimated amount required.”
To achieve the goal – a 50% increase over the past five years – the government aims to build about 300,000 homes each year.
However, the report is called UK Home Construction: Challenges and Opportunities, which shows some signs of progress.
The inflationary cost of housing construction fell to 2% in 2024, compared to 15% in 2022 and 10% in 2023.
It added: “At the same time, the prices of major land in the city of Brownfield and central London soared in 2021 and 2022 before falling sharply in 2023, suggesting that the land for builders may be cheaper.”
Overall, the S&P Construction Activity Survey scored 47.9 out of 46.6 in May, showing a sustained slowdown since the beginning of the year.
The government hopes that it relaxes planned restrictions and previously shelved housing projects will lead to greater construction in the middle of the parliament.
Prime Minister Rachel Reeves’ spending review next Wednesday is also expected to raise the Housing Department’s budget over the next five years.
“While we have not seen the level of construction required to achieve government goals, there are some positive signs in the market, with the inflation of pre-pandemic costs of land prices and inflation of construction, which has begun to be normal at the pre-pandemic levels,” said Aynsley Lammin, an analyst at Investec Construction and Construction.
“In addition to costs, adopting a partnership model (local authorities and developers work together) may also accelerate construction levels.
Lammin added: “These collaborations reduce development risks and capital requirements, resulting in more flexibility in providing new homes.
“By leveraging the co-investment of housing associations and institutional investors, we can create a capital lighting growth model that helps to remove the housing construction process.”
