Labour’s ambitious housebuilding programme is expected to slow the rate of house price growth across the UK, according to recent comments from Housing Minister Matthew Pennycook. The government believes that increasing the supply of homes will help ease long-standing affordability pressures in many parts of the country.
Speaking in the House of Commons, Mr Pennycook said Labour’s pledge to deliver 1.5 million new homes over the coming years would reshape local housing markets. He argued that a higher volume of homes would naturally reduce competition and create more balanced conditions for buyers and renters alike.
He explained that adding more properties of any tenure – whether for sale or rent – would have a positive impact on affordability. In areas where demand has consistently outpaced supply, new developments could help prevent prices from rising at unsustainable levels.
The minister estimated that a one per cent increase in housing supply could reduce house prices by around two per cent. However, he was careful to stress that this would not lead to a sudden crash in property values. Instead, he described the likely outcome as a gradual easing of price growth over time.
Mr Pennycook said that even with strong and sustained housebuilding, it would take years for prices to stabilise fully. In his view, the most realistic expectation is a long-term levelling off rather than a dramatic fall in house values.
These remarks come at a time when affordability is already under intense scrutiny. Recent figures show that the average UK house price has moved beyond £300,000 for the first time, increasing concerns for first-time buyers struggling to save for deposits.
Data from Halifax shows that house prices have risen by roughly £60,000 over the past six years. Over the last three years alone, prices climbed by about £16,000, placing additional strain on household budgets and widening the gap between income and housing costs.
At the same time, both rents and property prices have continued to grow faster than wages. This has deepened inequality between different regions of the UK and between younger and older generations, making access to home ownership increasingly difficult for many people.
While Labour’s housing targets are bold, progress on delivering new homes has been uneven. Official statistics suggest that around 309,600 homes have begun construction since the party came into government, but recent quarterly data shows a slowdown in building activity.
In the third quarter of 2025, housing starts fell by nine per cent compared with the same period the previous year, dropping to just over 33,000. This decline has raised doubts about whether the current pace of construction is sufficient to meet long-term targets.
London, which is central to Labour’s national housing ambitions, has seen particularly sharp falls in development. Industry estimates indicate that housing starts in the capital have dropped by more than 80 per cent over the past decade.
In 2025, construction began on just over 5,500 private homes in London, according to research by Molior. This decline has added further pressure to already stretched housing markets in the capital and surrounding areas.
Despite these difficulties, Mr Pennycook remains confident that Labour can still reach its target of 1.5 million new homes. However, he acknowledged that planning reform alone will not be enough to significantly increase supply.
The government plans to encourage greater collaboration between major housebuilders and explore alternative development models. There is also a strong focus on boosting the role of small and medium-sized developers to create a more diverse and resilient housebuilding sector.
Further details of these proposals are expected in the government’s upcoming housing strategy, which is due to be published in the coming weeks. This document is likely to outline how Labour intends to remove barriers to development and speed up delivery.
Labour’s approach signals a shift towards long-term market stability rather than short-term intervention. By aiming to flatten house price growth instead of forcing prices down abruptly, the government hopes to improve affordability while avoiding disruption to the wider economy.
If successful, the policy could help rebalance the housing market and provide more opportunities for buyers and renters across the UK. Much will depend on whether the promised increase in housing supply can be achieved consistently over the coming years.
As the housing strategy is unveiled, landlords, developers and prospective homeowners will be watching closely. The effectiveness of Labour’s plans will be judged not only on policy announcements but on real progress in building the homes the country urgently needs.
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