Savills has warned that housing delivery in England is likely to fall well below government expectations over the next few years, with new homes completions forecast to average around 167,500 annually up to 2029/30. This is significantly under the official ambition of 300,000 homes per year.
Despite being broadly in line with long-term historical averages, the overall outlook suggests a total of around 837,500 homes will be delivered across the five-year period, with a notable slowdown expected in the short term.
Near-Term Slowdown Expected
The research points to the next two years as the most difficult period for housebuilding. A combination of weak planning activity, fewer site starts and affordability pressures is expected to limit supply.
Recent data shows completions dropped by 4.1% to 190,602 homes in the year to March 2025. This continues a broader downward trend, with output falling by over 10% since the end of the Help to Buy scheme.
Savills estimates that completions will decline further, with around 189,000 homes expected in 2025/26, followed by a sharper drop to just over 150,000 in both 2026/27 and 2027/28.
Planning Constraints and Cost Pressures
The report highlights several factors affecting supply. Planning permissions for new homes have fallen by nearly 40% over the past three years, while housing starts and energy performance certificate (EPC) registrations have also declined.
On the demand side, affordability remains a major challenge. Higher interest rates, rising construction costs and slower house price growth are making development less viable for many projects.
Over the last four years, build costs have increased by 17.5%, while house prices have risen by just 4.5%, creating a widening gap that is squeezing developer margins.
Early Signs of Improvement
Although the short-term outlook remains weak, Savills notes some positive developments in the planning system.
Residential planning applications have increased by 44% over the past year, returning to levels seen earlier in the decade. At the same time, a higher success rate at appeal suggests that recent policy adjustments may be improving decision outcomes.
However, the consultancy warns that it will take time for these improvements to translate into completed homes, with a lag of at least 18 months expected.
Market Outlook and Tenure Trends
Savills expects private housing delivery without subsidy to average just over 102,000 homes per year over the forecast period, slightly below the previous five-year average. Build to Rent is also expected to dip marginally.
Affordable housing supported by government grants is forecast at around 29,200 homes annually, while Section 106 contributions are expected to fall by nearly one-fifth compared with previous years.
Policy Intervention Could Boost Supply
The report also suggests that targeted government support could help lift delivery levels.
A buyer support scheme introduced now could support tens of thousands of additional completions by 2029, with Savills estimating up to 120,000 homes could be delivered within the forecast period under such a measure.
In this scenario, annual output could rise towards 198,000 homes by 2028/29. While still below the government’s target, this would be enough to broadly maintain delivery at recent long-term averages.
Conclusion
Overall, Savills concludes that England’s housing market remains under pressure from both supply and demand constraints. While early signs of recovery are emerging in planning activity, current trends suggest that meeting national housing targets will remain a significant challenge without further intervention.
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