Leading real estate group forecasts just 167,500 new homes to be built per year, well below government’s hope for 300,000.
On the back of the news that Keir Starmer has resigned as Prime Minister, there’s more uncertainty for the housing sector as Savills provide a new estimate of the number of new homes to built each year for the next five years.
In the 2024 general election, Labour pledged to build 1.5m new homes over five years – or 300,000 new homes per year. Not only has this target been missed year on year, the numbers are falling. Savills reports that 190,602 new homes were built in the year up to March 2025, and 189,000 in the year up to March 2026.
It now predicts just 152,000 new homes will be built in the year 2026-27, barely half what was promised. On average, the total is 167,500 a year.
The shortfall is the result of a combination of factors. Full planning consents for new homes have fallen by 39% over three years to 180,000 in 2025. Starts and energy performance certifications (EPCs) have also fallen 16% in the three years up to December 2025.
As well as a supply issue, there’s less demand from buyers. Savills also says developers because, in the four years to February 2025, build costs increased 17.5% but house prices increased just 4.5%.
Savills also predicts falls in unsupported private sales, built-to-rent completions and Section 106 affordable homes.
Even so, there are some positive signs in the new data. In the past year, residential applications have risen 44%. Savills also says that a buyer support scheme could lift completions to 198,000 new homes a year by 2028-29.
Emily Williams, Director of Residential Research at Savills, says: ‘England’s housing delivery has proven to be reasonably resilient in the face of recent economic headwinds, but the underlying picture is becoming increasingly challenging. Low levels of planning consents and starts mean a thinner pipeline of homes under construction, while affordability pressures, higher interest rates and rising development costs are constraining demand and viability.
‘The result is that completions are likely to fall sharply in the short term, with our forecast pointing to just 152,000 new homes in 2026-27. There are encouraging signs at the start of the planning process, but it will take time for those improvements to feed through. In the meantime, boosting demand remains the clearest policy lever for lifting delivery.’
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