The number of new homes built in England could fall to half of the government’s target without intervention, according to a new study.
According to the FT, Savills has warned that the number of new builds could drop from 210,000 over the last five years to 160,000 this year due to higher borrowing costs.
Both the current government and Labour have pledged to build 300,000 homes per year to address the shortfall in supply.
Emily William, director of Savills residential research, attributed the decline in homebuilding to the planning system, higher building costs and weaker sales due to buyers struggling with elevated mortgage rates.
The problem has been “compounded by the absence of increased policy support” from the government, William added.
There were 212,570 new builds completed in the year to March 2023, but Savills has estimated that this will drop to 201,900 this year and to 160,000 next year.
In February, the Competition and Markets Authority (CMA) expressed ‘fundamental concerns’ about the number of homes built in the UK, citing “persistent shortfalls”.
UK housebuilder Taylor Wimpey reported a shrinking order book last month amid “market uncertainty and affordability challenges”. The number of new homes on its books shrunk by around 1,000 year on year.
Similarly, Persimmon said its new home completions fell by a third year on year during a “challenging period” of waning demand, high inflation and high raw materials costs.
The CMA has identified a number of problems in the market, including complex planning regulations holding back housebuilding, poor quality of homes constructed and high estate management charges.
A spokesperson for the Department for Levelling Up, Housing and Communities said £11.5bn was being invested in affordable homes.
“The fact is the highest annual rates of housing supply over the past 30 years have all been delivered since 2018, and our reforms and long-term plan for housing will drive up building rates even further,” the spokesperson said.