Housing Secretary Steve Reed wants Britain to “build, baby, build” towards the government’s flagship 1.5 million homes target by the next election. But housebuilding in England has slowed to its lowest level in nine years, with the number of homes built falling by 6% to 208,600 in the year to March 2025.
A combination of rising building costs and weakening house prices has left “half of the country unviable (for development projects) and the other half of the country unaffordable”, Steve Turner, executive director of the Home Builders Federation (HBF), told Sky News.
Ambitions for affordability are competing with high safety and design standards, which have been pushing up costs.
The government acknowledges housing delivery has not reached required levels – but maintains building will ramp up as their policies come into effect.
Since the election, 275,000 homes have been delivered to date, compared to the 400,000 that would have needed to be on track for 1.5 million homes.
“Additional housing is now at around 200,000 homes a year and is at best flatlining. We’re still some way away from where the government wants to get to, to meet the nation’s housing need,” Mr Turner said.
The rising price of materials and labour have contributed to the increase in the cost of building homes in recent years – for example, the cost of bricks and clay products increased by over 26% in the year to August 2023.
At the same time, higher interest rates since 2022 have increased the cost of financing development, in addition to weakening buyer demand, as mortgage rates have soared.
As a result, the sales value of homes has not kept pace, eating into profit margins in a trap described as the “jaws of death” by housing developers.
While the cost of building homes has increased by just over 13% on average since September 2022, house prices have increased by less than 3% on average…
