Housebuilding set to plummet to lowest level in a decade

The number of new homes being built will fall to the lowest level for a decade by the end of the year, according to Savills.  The agent’s latest Housing Completions Forecast for England found that while 210,000 homes were completed each year on average over the last five years, only 160,000 homes are projected to be completed in 2024/25. This means completions are set to fall by 24%, their lowest level for more than a decade and to almost half the government’s 300,000 homes a year target. Home starts in Q4 2023 were at 19,080 homes, which is less than half of the 10-year average and is the lowest number of homes starts in Q4 since records began. Causes for the fall Savills said the shortfall in delivery is the result of a combination of factors, including a decline in the number of planning consents, economic uncertainty, and lower demand from homebuyers owing to rising interest rates and inflation. The agent said that without major policy changes and a significant increase in grant funding for affordable housing, delivery of new homes in England will remain at this rate for the remainder of the decade. Savills added that the government would need to fund between 120,000 and 140,000 affordable homes a year, alongside a more supportive planning environment to plug the projected gap to meet the pledge for 300,000 home a year made by both the Conservative party and the Labour party. Kate Henderson, chief executive of the National Housing Federation, said: “These figures clearly show that boosting the supply of new affordable homes is not only key to solving the housing crisis, it’s also the only way to meet the government’s housing targets in the current climate and crucially can help the construction industry recover from the market downturn, protecting capacity and jobs. “Investment in affordable housing is also excellent value for money for the government, saving the taxpayer money across health and homelessness services as well as boosting the economy. Ahead of the election, we’re calling on all political parties to commit to a long-term plan for housing with funding to build a generation of new social homes.” Emily William, director, Savills residential research, said: “By the end of this year, we predict the number of new homes being built will fall to the lowest level for a decade. Affordable housing must play a central role in rebuilding the pipeline. Our research suggests we need to be delivering 120,000-140,000 affordable homes per year, with a high proportion of these homes being for social or affordable rent, as the most countercyclical housing tenures for demand.” Image © Anthony Harvey/Shutterstock