A new report from Investec warns that declining planning approvals could hinder the government’s ambition to deliver 1.5 million new homes by 2030, a goal that represents a 50% increase on previous targets.
According to UK Housebuilding: Challenges and Opportunities, just 241,000 homes received planning permission in England in 2024, a 3% drop from 2023. The slowdown is especially pronounced in the South East, with London seeing only 32,160 completions last year, less than half the level needed to meet demand.
The report points to several encouraging signs. Construction cost inflation has eased significantly, slowing to 2% in 2024 compared with 10% in 2023 and 15% in 2022. At the same time, land prices for urban brownfield and central London plots, which spiked in 2021 and 2022, fell sharply last year, making land acquisition more accessible for developers.
“While we are currently not seeing the levels of construction needed to achieve the government’s targets, there are some positive signs in the market, with both land prices and cost inflation in construction beginning to normalise to pre-pandemic levels," comments Aynsley Lammin, equity analyst for building and construction at Investec, “As well as costs, the adoption of a partnership model, where local authorities and developers work together, may accelerate building levels,"
"These collaborations reduce development risks and capital requirements, allowing for a more flexible approach to delivering new homes. By leveraging co-investment from housing associations and institutional investors, we can create a capital-light growth model that helps unstick the housebuilding process.”
The report advocates for wider adoption of collaborative models that align public and private stakeholders. These strategies, it suggests, could help ease financial pressures and support sustainable housebuilding across the UK.
