Labour’s housing target faces challenges amid slow start
Labour’s ambitious pledge to deliver 1.5 million new homes in England by 2029 is under scrutiny as housebuilders warn the government may fall short. Since Labour took office, housing starts have dropped from 207,000 to 139,000—the lowest level since the pandemic.
Housing Minister Steve Reed insists the target will be met, describing the growth curve as a “hockey stick” with major increases expected later in the parliament. Key reforms include the Planning and Infrastructure Bill, designed to speed up approvals, and measures to encourage building near public transport—potentially unlocking up to one million homes.
The Office for Budget Responsibility forecasts a sharp rise in completions towards the end of the decade, reaching 305,000 homes annually by 2029–30. However, industry voices, including the Home Builders Federation, argue more support for first-time buyers and relief from rising costs—such as landfill tax—are essential.
Labour says its approach will prioritise a “high and sustainable” building rate, involving councils and smaller developers alongside major firms, to tackle England’s housing crisis.
Construction sector faces sharp slowdown
UK construction activity fell at its fastest pace since the pandemic in November, according to S&P Global’s latest survey. The Purchasing Managers’ Index (PMI) dropped to 39.4, well below the 50 threshold that signals growth, marking the steepest decline in output for five-and-a-half years.
The downturn was led by infrastructure and housebuilding, with commercial projects also hit by uncertainty ahead of the Autumn Budget. Analysts suggest the pessimism may be overstated, predicting a rebound after tax rises came in lower than expected.
Employment in the sector fell for the 11th consecutive month, with job cuts at their highest since August 2020. Optimism among firms is now at its lowest since late 2022, driven by budget cutbacks and concerns over long-term economic growth.
Despite these challenges, the government remains committed to its 1.5 million homes target by 2029, supported by planning reforms currently progressing through Parliament. However, industry leaders warn that achieving this goal will require stronger support and confidence in the months ahead.
Regional house price growth: A changing landscape for the industry
The UK housing market is undergoing a significant shift, with forecasts suggesting that London’s long-standing dominance in house price growth is set to fade. Analysts predict that by late 2026, price growth in the capital will stall, while regions such as the East Midlands, West Midlands, and North West will see annual increases of around 3%. Over the longer term, cumulative growth from 2010 to 2028 is expected to be strongest in the Midlands and North, outpacing London, which will align more closely with the national average.
This change is driven by a combination of factors, including higher stamp duty and new council tax surcharges on high-value properties, which are dampening demand in London. At the same time, improved transport links and infrastructure investment are making regional living more attractive. For estate agents, this means shifting marketing strategies toward areas where growth is accelerating and affordability remains strong. Property developers and housebuilders will need to rethink land acquisition strategies, focusing on emerging hotspots rather than competing in saturated southern markets. With planning reforms on the horizon and government targets for 1.5 million new homes by 2029, the opportunity for sustainable growth outside London has never been clearer.
Affordability boost brings first-time buyers back into play
Halifax has reported that UK buyers are in the strongest position to purchase a home in nearly a decade, despite average property prices reaching a record £299,892 in November. While annual growth slowed to just 0.7%, affordability has improved significantly when compared to incomes, marking the best conditions since late 2015. Mortgage costs as a share of income are at their lowest level in three years, thanks to lenders easing criteria and reducing rates, with the average two-year fixed mortgage now at 4.85%.
This shift is particularly welcome news for first-time buyers, who have faced years of affordability challenges. Halifax’s data also reveals a clear north-south divide, with prices falling in London and the South East but rising in Scotland, the North West, and Northern Ireland, where growth is close to 9%. For estate agents, this creates a prime opportunity to target new entrants to the market and focus on regions where demand is strongest. Developers and housebuilders should prioritise affordable housing schemes and regional projects, aligning with Labour’s pledge to deliver 1.5 million homes by 2029. With interest rates expected to fall further and planning reforms set to speed up approvals, the outlook for the entry-level market is increasingly positive.
