England delivered just 208,600 net additional dwellings in 2024/25 — a 6% drop on the previous year and 16% below the 2019/20 peak. That single figure tells you almost everything about why the housing market feels so broken right now. Fewer homes being built means less choice, higher prices, and more competition for everything that does come to market.
I’ve been watching this space for years, and what’s happening now is different. It’s not just one bottleneck — it’s a pile-up of planning failures, labour shortages, rising costs, and policy changes that have all hit at once. The numbers keep getting worse, and the gap between what the government promises and what builders can actually deliver is widening fast. Here’s what you actually need to know.
What’s really driving the shortfall
The core problem is straightforward: housebuilders can’t build enough homes because the system won’t let them. Planning approvals have collapsed to levels not seen in over 15 years. Fewer than 34,000 units were approved in London over the past 12 months — the lowest since records began. That’s not a blip; it’s a structural breakdown.
What I’d do if I were looking at this as a buyer or investor is stop assuming the government’s targets mean anything. The 1.5 million homes target was always ambitious, but the numbers show it’s already out of reach. Between July 2024 and January 2026, only about 309,600 homes were delivered — roughly 20.6% of the target in about 30% of the parliamentary term. To catch up from here, England would need around 339,000 homes per year for the rest of the term. That rate has never been achieved in modern British history. If you’re waiting for supply to ease, you could be waiting a long time.
Why this matters for anyone buying, selling, or investing
When supply falls this far short of demand, the consequences ripple through every part of the market. Mortgage approvals have already weakened — falling from an average of 65,119 per month in 2025 to just 59,999 in January 2026, the lowest since January 2024. Housing demand is 12% lower year-on-year, and new sales agreed are down 9%. That sounds like a market cooling, but it’s not because there are enough homes. It’s because affordability has become so stretched that even people who want to buy can’t.
Take a typical first-time buyer in the South East. With mortgage rates still hovering around 4–5% for fixed deals, and average prices in many areas well above £300,000, the monthly payment on a 90% mortgage is often higher than local rent. That’s not a demand problem — it’s a supply and affordability problem rolled into one. The UK’s property affordability crisis isn’t going to fix itself while completions keep falling.
What I notice most is how the regional picture varies. London housing registrations fell 27% in 2025 — the only region to decline. Starts in the capital are running at just 2% of planning targets. Meanwhile, Zoopla analysis found that half the country is economically unviable for new housing development. That means even where planning permission exists, the numbers don’t add up for builders. If you’re looking at property in the North or Midlands, you might see more activity from partnership-led builders like Keepmoat, whose average selling price of £213,000 reflects a focus on affordable housing. But in London and the South East, the gap between what’s needed and what’s being built is only getting wider.
Where the system keeps failing
The planning pipeline is the most obvious place things go wrong. Just 42,000 new homes received planning permission in Q3 2025 — a 31% drop on the same quarter in 2024 and the lowest quarterly total in over 15 years. The number of housing sites permissioned has fallen for 11 consecutive quarters and now stands at just 36% of the level seen in 2018. That’s not a temporary dip; it’s a structural collapse in the pipeline that feeds future completions.
→ Scroll right to see all columns
| Metric | Current Level | Change |
|---|---|---|
| Planning permissions (Q3 2025) | 42,000 homes | 31% drop year-on-year |
| 12-month permissions (to Sep 2025) | 209,781 homes | Lowest since 2013 |
| Housing sites permissioned | 36% of 2018 level | 11 consecutive quarterly falls |
| London approvals (12 months) | Fewer than 34,000 units | Lowest on record |
Labour shortages that won’t fix themselves
The Construction Industry Training Board projects a need for 47,860 additional construction workers per year — 293,300 over five years — just to meet projected demand. But construction employment has already declined 10.8% since the pandemic, and nearly 22% of the remaining workforce is over 50. Apprenticeship starts have dropped 30% over the past decade, and only 19% of parents would encourage their child into a construction career. The government’s £625 million skills investment aims to create 60,000 specialist workers, but that covers less than 25% of the identified gap. Electrician wages have risen 7% in 2024 and 5% in 2025, which tells you exactly where the shortages are most acute.
Cost inflation that eats margins
Building costs are rising faster than general inflation. The BCIS General Building Cost Index showed annual inflation of 4.4% in October 2025, exceeding CPI. Forward forecasts project building costs rising 14% over five years to mid-2030, with tender prices up 15%. Material prices for new housing specifically rose 4.2% in the year to December 2025 — the 12th consecutive month of increasing annual movement. Ready-mixed concrete deliveries in 2025 hit 11 million cubic metres, the lowest on record, while concrete block deliveries fell 17.3% annually. When basic materials are in short supply and getting more expensive, every home that does get built costs more.
Policy costs that make investment harder to justify
Two specific policy changes are about to make things worse. The Landfill Tax doubles in April 2026, which will increase the cost of disposing of construction waste. More significantly, the new Building Safety Levy arrives in October 2026, adding approximately £15,000 per home. HBF CEO Neil Jefferson put it plainly: “Home builders continue to grapple with rising policy costs and new taxes, making investment hard to justify.” When you combine these with the existing regulatory burden, it’s no surprise that government regulations are reshaping the entire development landscape.
What I’d do if I were a developer right now is focus on partnership housing models. Vistry Group’s aggressive partnership strategy delivered 16,800 completions, putting it close behind the merged Barratt Redrow entity at 17,200. Partnership housing — where builders work with housing associations and local authorities — tends to have more predictable demand and fewer planning delays. It’s not a silver bullet, but it’s one of the few areas where the numbers still work.
What you can actually do about it
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If you’re a buyer, seller, or investor, you can’t fix the planning system or train 47,000 new construction workers. But you can make smarter decisions based on what’s actually happening. Here’s what I’d focus on.
Understand your local pipeline, not national headlines
National figures hide huge regional variation. London registrations fell 27% in 2025, but other regions saw increases. NHBC registration data shows 115,350 new homes were registered in 2025, up 11% on 2024, with private sector registrations rising 12%. That suggests some areas are still seeing activity. Check your local planning authority’s website for major applications and approvals. If permissions are flowing in your area, completions will follow in 12–18 months. If they’re not, you’re looking at continued scarcity. A good negotiation strategy becomes even more important when supply is tight.
Factor in the new costs coming down the line
The Building Safety Levy adds roughly £15,000 per home from October 2026. That cost will be passed on to buyers in some form — either through higher prices or reduced supply as marginal schemes become unviable. If you’re planning to buy a new-build after that date, expect prices to reflect the additional regulatory burden. If you’re selling, the window before the levy kicks in might be your best opportunity to get a premium for a newly completed home.
Look at partnership and affordable housing schemes
Keepmoat’s average selling price of £213,000 reflects its focus on affordable, partnership-led housing in the Midlands and North. These schemes tend to have stronger demand and more predictable timelines because they’re backed by housing associations and local authorities. If you’re an investor, these are worth a closer look — the rental demand in affordable housing is generally more stable, and the exit strategy is clearer. A renovation focused on rental yield can work well in these markets.
Prepare for longer build times and higher costs
With labour shortages and material price inflation, any construction project will take longer and cost more than it did three years ago. If you’re planning a renovation or extension, add at least 20% to your budget and 30% to your timeline. A smart leak detector is a small investment that can save you thousands if a project runs into delays and you’re not living in the property yet — water damage from unfinished work is one of the most common claims I hear about.
Watch the emerging trends in co-living and flexible housing
With traditional housebuilding struggling, alternative models are gaining traction. Co-living schemes, build-to-rent, and flexible living arrangements are filling some of the gap that conventional developers can’t. These aren’t niche anymore — they’re becoming a significant part of the supply picture, especially in cities where land is scarce and planning is slow. If you’re an investor, co-living trends are worth understanding because they’re reshaping what “housing supply” actually means.
Frequently asked questions
Will house prices drop if builders can’t keep up? ▾
How long does it take from planning permission to completion? ▾
Is the government’s 1.5 million homes target completely dead? ▾
Which housebuilders are still delivering? ▾
Should I buy a new-build now or wait? ▾
What’s the best way to protect myself from construction delays? ▾
The housing supply problem isn’t going to fix itself quickly. Planning permissions are at 15-year lows, the workforce is shrinking, costs are rising, and new policy costs are coming. The gap between what’s promised and what’s possible is wider than most people realise. If you’re making decisions about buying, selling, or investing, the most useful thing you can do is base those decisions on what’s actually being built — not on what the government hopes will be built.
If this was useful, you might also want to read Is the UK housing market about to crash? Experts weigh in.
Sources and Further Reading
Negotiating the best deal: expert tips for UK property buyers — Practical negotiation strategies for a market where supply is tight and competition is fierce.
UK house building faces a challenging 2026. UK Construction Blog, 2026.
UK housebuilder output report 2026. New Builds, 2026.
