Housing Secretary Steve Reed is pushing for increased home construction to reach the government’s goal of 1.5 million homes by the next election. However, housebuilding in England has slowed significantly, with only 208,600 homes built in the year to March 2025, a 6% decrease from the previous year.
Rising building costs and falling house prices have made many areas unviable for development projects, according to Steve Turner, executive director of the Home Builders Federation (HBF).
The government recognizes the shortfall in housing delivery but remains optimistic that building will accelerate as their policies take effect.
Despite delivering 275,000 homes since the election, the current rate of around 200,000 homes per year is far below the target needed to meet the nation’s housing demand.
The cost of materials and labor has contributed to the rising cost of building homes, while higher interest rates and weakening buyer demand have impacted profit margins for housing developers.
The government is considering emergency measures to boost home construction in London, where new homes starting construction have dropped significantly below the target.
New building and fire safety regulations, particularly in London, have added significant costs to home construction, making it challenging for developers to meet the requirements set by the government.
There are concerns about the viability of development sites and the pressure on the private sector to fund affordable social housing projects.
While some are advocating for permanent changes to regulations to support home construction, others are wary of compromising safety standards for cost-saving measures.
History indicates the outcome of that,» she remarked.
Outside of London
While these challenges have been particularly prominent in London, the rest of the country also encounters significant obstacles.
An analysis by online property portal Zoopla reveals that it is now unfeasible to construct in just under half of England, as the sales value of homes is lower than the total cost of building a new home.
The analysis does not include figures for London, but research firm Molior found that building houses in half of London would be unprofitable even if housing and infrastructure contribution requirements were completely eliminated.
They also found that the areas where construction is feasible are those where people are less likely to afford to buy, leading to a mismatch between supply and demand.
The potential to develop new homes is higher in the south of England, where the prices of new builds are among the most unaffordable for buyers.
Although planning reforms have been «very positive,» Mr. Turner noted that it only addresses one aspect of the issue, and that the government «needs to find a way to support buyers, which will in turn create confidence with house builders that they can ultimately sell the product they deliver.»
There is currently no indication that the government plans to reintroduce a version of the Help to Buy scheme, which critics argue contributed to rising house prices and decreasing affordability in the long term.
Long-term planning required
Speculation surrounding the upcoming budget has also added to uncertainty, with developers urging the government to reconsider proposed landfill tax changes, which would further increase building costs.
«We have seen an increase in regulation over the past few years. Often well-intentioned regulation, but it can hinder the viability of sites and developments,» a spokesperson for the homebuilder Barratt Redrow told Sky News.
«We purchase land based on construction costs, including the regulatory burden, at the time, and if it becomes more expensive to build four years later when we have planning permission, it will impact the financial feasibility of proceeding with the development,
«As an industry and as a business, we are not opposed to the right kind of regulation, but it is crucial to have long-term certainty because the process of purchasing land and constructing houses is lengthy and involves significant risk,» he added.
Secretary of State for Housing, Communities and Local Government Steve Reed. Pic: PA
Housing Secretary Steve Reed stated: «Today’s statistics demonstrate, in the clearest terms yet, the extent of the housing crisis we inherited and are now addressing.
«We inherited a planning system that hindered rather than facilitated building, as well as high inflation and soaring construction costs that created a perfect storm impeding housebuilding.
«Our target of 1.5 million homes is not just a number – it is a means to provide children with a secure home, allow young people to finally move out and enjoy independence, and offer working families a place to call their own.
«We have already removed the barriers that prevented this country from building, revamped the planning system, and injected record levels of investment into social housing. This will bring about the necessary change to end the housing crisis by initiating construction wherever homes are most needed.»
Development ‘impacted by a perfect storm of costs’
A spokesperson for the Mayor of London remarked: «Through the London Plan, the mayor has been able to establish the highest housing design standards compared to other regions, and these standards have supported the delivery of high-quality homes in London
«However, London requires more sites to be developed to meet the housing needs of the capital, and development has been affected by a combination of costs stemming from national policy and broader economic conditions that disproportionately affect London.
«Through our proposed revisions to London Plan design guidance, we aim to reduce the obstacles to housebuilding and introduce flexibility so that planning policies are applied as originally intended – facilitating the advancement of developments. These measures will help unlock stalled building sites, giving the mayor greater leverage to approve homes and expedite the delivery of thousands more homes.»
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Housing Secretary Steve Reed wants Britain to «build, baby, build» towards the government’s flagship 1.5 million homes target by the next election. Housebuilding in England has slowed significantly, dropping by 6% to 208,600 homes built in the year to March 2025 – the lowest level in nine years. Rising building costs and declining house prices have made half of the country unviable for development projects and the other half unaffordable, according to Steve Turner of the Home Builders Federation (HBF).
The government recognizes that housing delivery has not met the required levels and acknowledges the need for increased building. However, challenges such as high safety and design standards, which drive up costs, are competing with affordability goals.
The cost of materials and labor has risen, with the price of bricks and clay products increasing by over 26% in the year to August 2023. Additionally, higher interest rates since 2022 have made financing development more expensive, leading to weakened buyer demand.
Despite a 13% increase in building costs since September 2022, house prices have only risen by less than 3% on average across Britain. In London, flat prices have even decreased by 0.5%.
The government is considering emergency measures to boost home construction in London, where new homes starting construction have fallen drastically. These measures may include temporary reductions in affordable housing targets and relief from levies.
New building and fire safety regulations implemented since 2022 have added costs for developers, particularly in London. These regulations include requirements for additional fire escape stairwells and energy efficiency improvements, increasing the cost of delivering homes in the capital.
Property developers are facing challenges in meeting government requirements due to financial strain. New costs, such as residential development tax and building safety levies, are expected to further impact the viability of development projects.
While some are in favor of making emergency measures permanent, others are cautious about compromising on safety standards in the pursuit of affordability. Managing the tension between safety and costs is crucial in ensuring the sustainability of the housing market. History shows us the path to success,» she noted.
Outside of London
While the challenges in London have been significant, the rest of the country also faces similar issues.
According to analysis by online property portal Zoopla, it is now not financially feasible to build in just under half of England, as the sales value of homes is lower than the total cost of constructing a new home.
The analysis excludes figures for London, but research from Molior found that building homes in half of London would be unviable even if housing and infrastructure contribution requirements were completely removed.
It was also found that areas where building is economically viable are the same areas where people are less likely to afford to buy, leading to a mismatch between supply and demand.
The viability of developing new homes is higher in the south of England, where new build prices are among the most unaffordable for buyers.
While planning reforms have been seen as «very positive,» Mr. Turner mentioned that it only addresses one side of the issue. He emphasized the need for the government to support buyers to create confidence among house builders that they can sell the homes they deliver.
There is currently no indication that the government plans to reintroduce a version of the Help to Buy scheme, which critics argue contributed to rising house prices and reduced affordability in the long term.
Long-term planning required
Uncertainty surrounding the upcoming budget has added to concerns, with developers urging the government to reconsider proposed landfill tax changes that would further increase building costs.
«We have seen an increase in regulations in recent years, which, while well-intentioned, can hinder the viability of sites and developments,» a spokesperson for homebuilder Barratt Redrow told Sky News.
«We purchase land based on construction costs, including regulatory burdens, at the time of purchase. If costs increase by the time we have planning permission, it may impact the financial feasibility of the development,
«As an industry and as a business, we are not opposed to the right kind of regulation, but long-term certainty is crucial due to the lengthy and risky process of buying land and building homes,» he added.
Secretary of State for Housing, Communities and Local Government Steve Reed. Pic: PA
Housing Secretary Steve Reed stated, «Today’s statistics clearly show the extent of the housing crisis we inherited and are now addressing.
«We inherited a planning system that hindered rather than facilitated construction, along with high inflation and soaring construction costs that created obstacles to housebuilding.
«Our goal of 1.5 million homes is not just a number – it is a way to provide children with a stable home, allow young people to gain independence, and offer working families a place to call their own.
«We have already removed the barriers that hindered construction in this country, reformed the planning system, and invested record amounts in social housing. These actions will bring the necessary change to end the housing crisis by initiating construction wherever homes are most needed.»
Development impacted by rising costs
A spokesperson for the Mayor of London commented, «Through the London Plan, the mayor has set high housing design standards compared to other regions, which have supported the delivery of high-quality homes in London.
«However, London requires more development sites to meet the housing needs of the capital, and development has been affected by rising costs due to national policies and broader economic conditions, which disproportionately affect London.
«With our proposed changes to London Plan design guidance, we aim to reduce barriers to housebuilding and introduce flexibility in applying planning policies as intended, to facilitate the progress of developments. These measures will help unlock stalled building sites, giving the mayor more authority to approve homes and accelerate the delivery of thousands of homes.»
The Data x Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.
. Housebuilding in England has slowed significantly, reaching its lowest level in nine years. The number of homes built fell by 6% to 208,600 in the year to March 2025. Steve Turner, executive director of the Home Builders Federation (HBF), explained that rising building costs and weakening house prices have made half of the country unviable for development projects and the other half unaffordable. Despite the government’s acknowledgment of the housing delivery shortfall, building is expected to increase as new policies take effect. However, the current rate of additional housing is around 200,000 homes per year, far from the government’s goal of 1.5 million homes. Rising material and labor costs, as well as higher interest rates, have contributed to the increase in the cost of building homes in recent years. Housing developers are struggling with shrinking profit margins due to stagnant sales values and increased costs. The government is considering emergency measures to increase housing construction in London, where new homes starting construction have significantly decreased. Regulations on building design standards have also added to the cost of building homes, particularly in London, with additional requirements such as fire safety rules and energy efficiency standards. The viability of housing development sites is under strain, leading to a decrease in new home supply. Private developers play a crucial role in building affordable social housing through a cross-subsidy model. While some advocate for permanent emergency measures, others caution against compromising safety standards in the pursuit of cost reduction. «History tells us where you get to with that,» she added.
Outside of London
While these issues have been particularly problematic in London, the rest of the country also faces significant challenges.
Analysis by online property portal Zoopla reveals that building in just under half of England is now not financially viable, as the sales value of homes is lower than the total cost of building a new home.
The analysis does not include figures for London, but research firm Molior found that building homes in half of London would also be unfeasible even without housing and infrastructure contribution requirements.
They also found that areas where building is viable are those where people are less likely to afford to buy, leading to a mismatch between supply and demand.
The ability to develop new homes is better in the south of England, where new build prices are among the most unaffordable for buyers.
While planning reforms have been seen as «very positive,» Mr Turner emphasized that it only addresses one side of the issue, and the government must also find a way to support buyers in order to build confidence with house builders.
There is currently no indication that the government plans to reintroduce a version of the Help to Buy scheme, which critics argue contributed to increased house prices and reduced affordability in the long term.
Long-term planning needed
Uncertainty surrounding the upcoming budget has added to the challenges, with developers calling on the government to reconsider proposed landfill tax changes that would further increase building costs.
«We have seen an increase in regulation in recent years, which can hinder the viability of sites and developments,» a spokesperson for the homebuilder Barratt Redrow told Sky News.
«We are not against the right kind of regulation, but we need long-term certainty to mitigate risks involved in buying land and building houses,» the spokesperson added.
Secretary of State for Housing, Communities and Local Government Steve Reed. Pic: PA
Housing Secretary Steve Reed stated: «Today’s statistics clearly show the extent of the housing crisis we inherited and are addressing.
«We have already made significant changes to the planning system and invested in social housing to tackle the housing crisis and ensure that homes are built where they are needed the most.»
Development ‘hit by a perfect storm of costs’
A spokesperson for the Mayor of London mentioned that development in the city has been impacted by a combination of national policy and economic conditions that disproportionately affect London.
«Through proposed changes to London Plan design guidance, we aim to reduce barriers to housebuilding and introduce flexibility to accelerate developments,» the spokesperson added.
The Data x Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.