Savills warns UK housing delivery to miss target

A new forecast by Savills Research indicates that England will significantly miss the government's target of building 300,000 new homes annually.

UK housebuilding Savills

Over the next five years (to 2029/30), completions are projected to average only 167,500 per year, totalling 837,500 homes – a rate similar to the 20-year average but far short of the target.

The most challenging period is expected in the next two years, driven by a sharp decline in planning consents and housing starts, coupled with ongoing affordability issues impacting buyer demand. Latest figures show a 4.1% drop in completions to 190,602 in the year to March 2025, marking a 10.2% decrease since the end of the Help to Buy scheme two years prior. Savills predicts output will fall further to just over 150,000 homes in both 2026/27 and 2027/28.

The report identifies both supply and demand-side issues contributing to this weaker outlook. On the supply side, annual planning consents for new homes have plummeted by 39% in three years, while housing starts are down 31%. On the demand side, affordability remains a major hurdle, and developers face a challenge with rising construction costs outpacing house price growth.

Development viability is highlighted as a critical issue, with build costs rising by 17.5% in the four years to February 2026, compared to a mere 4.5% increase in house prices. This imbalance makes it harder for new projects to proceed.

Despite the bleak short-term forecast, there are early signs of improvement in the planning system, with residential applications increasing by 44% in the last year and a higher success rate for appeals. However, Savills cautions that it will take at least 18 months for these improvements to translate into increased completion volumes.

Private sales (without support) are expected to decrease, while BTR completions are also forecast to slightly decline. Grant-funded affordable housing and Section 106 affordable housing are both projected to see lower annual averages compared to the previous five years.

Savills suggests that a new buyer support scheme could significantly boost housing delivery. If implemented now, such a scheme could contribute an estimated 85,000 completions by the government's March 2029 target and 120,000 within the report's forecast window. This could potentially raise completions to 198,000 homes per year by 2028/29, helping to maintain housebuilding at the last decade's average despite current challenges.

Emily Williams, director, Residential Research at Savills, said: “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.”