Real estate advisor Savills forecasts that the UK will complete only 840,000 new homes by 2028-29, falling well short of the government's ambitious target of 1.5 million. This shortfall of 44% is attributed to subdued demand from individual buyers, private and social landlords, and limitations in the housebuilding sector's capacity, such as supply chains and labor force expansion. Although planning reforms are expected to increase the supply of consented land, the benefits will take time to translate into higher completion rates.
New home completions already saw a decline of 6.5% in the year to March 2024, totaling 198,600 homes, largely following the discontinuation of the Help to Buy scheme in March 2023. Savills estimates a further drop to 180,700 completions for the 2024-25 year. Without significant demand-side support, annual completions are projected to remain low, between 160,000 and 170,000. Even with substantial support, the maximum achievable would be around 1.2 million homes by March 2029, still short of the government's aim.
The report emphasizes that housebuilders are hesitant to increase delivery without assurance of robust market demand. Historically, private sector housebuilding has accounted for 77% of new build starts over the past five years. Sales rates for PLC housebuilders in 2024 are 15% below pre-pandemic levels when Help to Buy boosted volumes. The reintroduction of a similar scheme or increased grant funding could stimulate tens of thousands of additional home sales annually, potentially enabling housing associations to undertake more projects. Furthermore, relaxing mortgage restrictions could unlock transaction volumes and increase capacity for new homes, a move the Financial Conduct Authority might consider to allow first-time buyers to borrow more.
