Housing delivery is set to fall despite recent planning reform as demand for new homes remains subdued, warns property group Savills.
Using recent build data as a guide, the group forecasts there will be roughly 840,000 new homes completions in the five years to 2028/29, well short of the government target of 1.5 million.
Falling planning consents in the last three years have reduced the pipeline of new homes which can be delivered in the near term, while recent planning reform will take time to have an impact on completions, it said.
It cautioned that subdued demand for new homes will also remain a barrier to growth, as housebuilders will only build where they see demand for the finished homes.
New home builds behind target
New homes completions fell in the year to March 2024 by -6.5% to 198,600 homes, in the most recent year of official data.
A drop in completions was widely anticipated, given that the Help to Buy scheme, a significant demand boost for new homes, had ended in March 2023.
The scheme (and other smaller sales support schemes) had contributed 26,000 sales in 2022/23, and up to 55,700 sales at its peak in 2020/21. Its end was always going to leave a sizeable gap.
In this context, the number of completions remained relatively robust in 2023/24, falling by just -13,750 homes. Completion volumes were supported by a record year for Build to Rent completions (up 80% on the previous year) and stability in affordable housing delivery (down just -2.3%).
But forward indicators suggest that new homes completions will fall further in the next couple of years, Savills said.
“We estimate that 180,700 new homes were completed in 2024/25, based on EPC data. And a continued fall in full planning consents in 2024/25 suggests the decline in completions will necessarily continue for up to two years (the rough length of time between a change in consents volumes and a subsequent change in completions).”
Starts dropped by around half in the year to June 2024, but have begun to rebound, according to the Ministry of Housing, Communities and Local Government.
“Still, this also suggests that completions over the next year or two will remain low. This is consistent with the drop in completions we have forecast in 2025/26, down to just over 160,000, their lowest since 2014/15,” Savills said.
Conditions to improve – but not enough
It is likely that the government’s recent planning reforms will increase the supply of consented land beyond the next couple of years, Savills said.
“We do expect a slight rise in completions from 2026/27, but the scale of this rise will be constrained not by the planning environment but by the demand to take on new homes from individual buyers, investors and registered providers. We are therefore forecasting completions to reach 166,000 in 2028/29.”
This is well below the government’s ambitions, regardless of whether their target represents 1.5 million completions or 1.5 million net additional dwellings, which would amount to an estimated 1.38 million new home completions when accounting for historic rates of conversion and changes of use.
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