Missing the target

Posted: June 22, 2026 | Author: julesbirch | Filed under: Housebuilding |Leave a comment

Originally written as a column for Inside Housing.

Never mind 1.5 million new homes in England during this parliament. The emerging question is whether the government can deliver 1 million.

The chances of hitting the target were between slim and zero even at the point that it was made a manifesto commitment. 

Estimates from the Ministry of Housing, Communities and Local Government (MHCLG) indicate that delivery was already slowing before the economic fall-out from the crisis in the Strait of Hormuz made the prospects for housebuilding look even grimmer. 

Between the start of the Labour government on July 9 2024 and June 14 this year delivery is estimated at 392,400 net additional homes. 

Far from the 300,000 needed every year of this parliament the number of additional new homes fell below 200,000 in 2025/26. 

Delivery of under 400,000 in almost two years means 1.1 million will be required over the rest of this parliament to hit the target: 367,000 a year.

A report in the Sun on Sunday last month suggested that tensions over the issue had broken out right at the top of government as chancellor Rachel Reeves asked housing secretary Steve Reed why he was not living up to his ‘build baby build’ slogan. ‘You have been in the job for months now, Steve,’  she reportedly told him. 

But the 1.5 million target was undeliverable in the first place and was always likely to be derailed even further by outside events. 

The real challenge is to deliver a sustainable long-term increase in output. Here at least, ministers can reasonably point to decisions taken in areas like planning reform, the National Housing Bank and new towns and the £39 billion, ten-year programme of investment in social and affordable housing  as reasons why output should increase later in the parliament and beyond. 

But they have still not addressed structural issues in the market, such as the divide identified by Zoopla last year, with new homes unaffordable in half of the country and not financially viable in the other half of the country.

They have not acknowledged the reality that even ‘the biggest boost in social and affordable housing in a generation’ will not deliver much of an increase in output until the early 2030s.  

And broader economic trends are pulling the market down further, with reports from a succession of major housebuilders have hammered home that message. 

Berkeley Group has announced it will stop buying new land and hiring new staff as costs rise much faster than its selling prices, while Taylor Wimpey has warned that pricing and costs are coming under pressure. Crest Nicolson has delayed publication of its results during talks with its lenders, while Gleeson says concerns about inflation have triggered ‘higher than usual caution’ about its financial position. 

So the market was severely challenged even before the impact of the Gulf crisis, with higher inflation driving up costs still further and higher interest rates reducing affordability for buyers. 

The Construction Products Association now forecasts that annual delivery of net additional homes will not get back above 200,000 until 2029/20. Its forecast for the whole of this parliamentary term is now only 943,204 homes. 

If that’s even half-right the debate could soon move on from whether ministers can hit their 1.5 million target to focus on a much more embarrassing question.  Can they build more than the 1 million delivered in the last parliament by the chaotic governments of Boris Johnson, Liz Truss and Rishi Sunak? 

Something will have to change and soon to avoid that and it could be a close run thing. 

The Home Builders Federation says that the average cost of building a home has risen by £76,000 since 2020, half of that down to increased costs for labour and materials but the other half due to extra taxes and levies and higher regulatory costs. 

It is calling for a moratorium on new taxes, including the suspension of the Building Safety Levy, arguing that viability will be further eroded without a willingness to make trade-offs between different government priorities.

Some housebuilders are also calling for the return of Help to Buy, seeing it as the least bad option for restoring confidence, but critics will need convincing that this will not just be help for profits, dividends and bonuses. 

By contrast, there are growing calls to invest more in social housing. In the contest to be the new Labour leader and prime minister  Andy Burnham has called for a return to ‘a post-war level of council house building’ and Wes Streeting has revealed plans to speed up construction of social homes. 

Or the government could support the private market and affordable housing at the same time and look to the sort of policies introduced after the financial crisis to kickstart stalled developments and after the 1990s housing crash to fund housing associations to acquire unsold market homes. 

None of these ideas will be cheap or simple to implement but a combination of all of them may be required to get housebuilding back on track. 

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