How are those 1.5m new homes coming on Angela?
MARKET UPDATE
We are pleased to say that all indications have the market is starting to cautiously pick up as interest rates start to creep downwards, with the Construction Products Association’s Construction Industry Forecasts predicting:
“The expectation six months ago was that continued gradual rises in demand would lead to around 5-10% growth per year over the next few years, assuming no major disruptions. The slow start to the year and weaker UK economic growth prospects, combined with higher inflation for longer and potentially fewer interest rate cuts, has led to a degree of caution, however. So, overall, house builders were broadly expecting a slight revision down in expectations for this year to between 3% and 8% growth in completions this year.”
SO HOW IS THE 1.5 MILLION NEW HOUSES TARGET COMING ON?
More optimism in the market doesn’t mean we’re on track for government targets though. We’re now approaching a year into the current Labour administration’s 5 year term, perhaps a good time to review progress on the 1.5 million new homes Angela Raynor promised the UK.
There is already much spin and confusion around the target since, in October 2024, Housing Minister Matthew Pennycook confirmed to Parliament that the 1.5 million figure refers only to new homes in England.
In March, Chancellor Reeves said the government would get to within “touching distance” of its 1.5m target, telling MPs that 1.3 million new homes would be created by 2029. However, the 1.3 million figure she used includes housebuilding in Scotland, Wales and Northern Ireland.
Were her figures based on the March update from The Office for Budget Responsibility? It claims: “Cumulative net additions to the UK housing stock are forecast to be 1.3 million from 2025-26 to 2029-30” Note that the OBR’s figures include at least 6 months beyond the current parliament, and the BBC understands that, in fact, only 1 million new homes are expected to be built in England over the remainder of the parliament.
(Sources: https://obr.uk/efo/economic-and-fiscal-outlook-march-2025/#chapter-2
https://www.bbc.co.uk/news/articles/c4g0nv2e70do)
WHO’S SAYING WHAT?
Opinions are like, well you know, everyone’s got one. We thought we’d take a quick look around the usual and some less usual suspects and who’s saying what about government housing targets:
National Housing Federation (NHF), the Home Builders Federation (HBF) and Savills: The government is set to fall short of its ambition to build 1.5 million new homes over this Parliament by nearly half a million homes – almost a third of the target – without significant government support for social housebuilding and first time buyers.
Construction Products Association: “The expectation six months ago was that continued gradual rises in demand would lead to around 5-10% growth per year over the next few years, assuming no major disruptions. The slow start to the year and weaker UK economic growth prospects, combined with higher inflation for longer and potentially fewer interest rate cuts, has led to a degree of caution, however. So, overall, house builders were broadly expecting a slight revision down in expectations for this year to between 3% and 8% growth in completions this year.”
Home Builders Federation: The share of people able to afford a home has plummeted due to rising house prices, mortgage costs, and lack of government support, with only the top 30% of earners able to buy. (source: www.hbf.co.uk)
Centre For Cities: Housebuilding will miss 2029 target by at least 388,000 homes despite revised planning policy (source: www.centreforcities.org)
The Big Issue: Noble Francis, economics director at the Construction Products Association (CPA), told Big Issue “the government will fail to meet its target by around 50% and even that is assuming strong growth”. He added that the CPA’s forecasts show Labour is facing a challenge to hit 1.1 million new homes before the next election with small and medium-sized enterprises (SMEs), housing associations and local authorities all facing barriers to building. (Source: www.bigissue.com)
Kirstie Allsopp: “Angela Rayner says they’re going to build 1.5 million new houses – it’s absolute b—–ks! Costs have soared and regulations are ridiculous, making it too expensive to build… People are being lied to. They’re being told that the government is actually building the houses, which it’s not.” (source: telegraph.co.uk)
James Scott
Managing Director
