Housebuilding Plummets in Key English Areas Amid Rising Costs and Weak Demand

Housebuilding has experienced a dramatic decline in numerous English towns and cities, a phenomenon attributed to escalating construction costs and a dwindling pool of potential buyers, according to recent figures. More than half of local authorities in England are now completing fewer homes than they did in the 2020-21 period, with one in three seeing a reduction of at least a third.

The analysis, conducted by Keyzy, a rent-to-buy provider, highlighted a severe housing construction freeze in specific regions. Lincoln stands out with a 97.5% drop in new home completions over five years, falling from 400 homes in 2020-21 to just ten annually in the last two years.

Crawley in West Sussex has seen a 93.8% decrease, followed by Reigate & Banstead in Surrey, where completions fell by 89.8% from 490 to 50 homes in the past year. "New-build droughts are cropping up across the country," stated Jeremy Matallah, co-founder of Keyzy. "These are areas that might have been doing quite well five years ago in terms of solving the housing crisis, but have since seen their pace of home creation collapse."

Major cities are also affected. Sheffield recorded an 82% fall, completing 190 homes in the year ending 2025-26, down from 1,070 in 2020-21. Liverpool's numbers dropped by 66% to 160 homes, while Manchester saw a similar 66% decrease, completing 1,100 homes in a city of 600,000 people. Across Greater Manchester, completions decreased from 8,620 to 4,920 during the same period. Matallah noted that "the problem is not confined to remote rural villages or sleepy market towns but is prevalent in some of the nation's biggest cities."

Newcastle experienced a 34.5% decline, with completions falling from 1,130 to 740. Within London, 17,760 homes were built last year, a 12.9% decrease from five years prior. Boroughs like Kensington & Chelsea saw drops of 80%, while Kingston upon Thames and Sutton fell by 77.8%. However, Tower Hamlets reported the largest absolute decrease, with 2,120 fewer homes built annually, a 73.9% reduction. Southwark is building 1,120 fewer homes, a 53.6% drop, and Croydon is down by 880 homes, a 70.4% decrease.

Despite the widespread downturn, some areas are seeing significant growth. Fareham in Hampshire has reported a 457% increase in completions, reaching 390 homes. Uttlesford in Essex saw a 378% rise to 860 homes, and Torridge in Devon increased by 358% to 550. In London, Brent experienced a remarkable 661% surge to 1,750 homes, while Haringey and Greenwich reported increases of 300% and 294% respectively.

Property experts attribute the decline to a combination of falling property values and increased construction expenses. The Home Builders Federation reports that the average cost to build a home has risen by approximately £76,000 compared to 2020. Data from the Building Cost Information Service indicates a 50% increase in average building costs over the last decade. In London, construction costs for a typical two-bedroom flat have reportedly surged by 75% since 2016, from £245,000 to around £430,000, while the average flat value has only increased by about 6%.

Approximately half of the increased cost is due to materials and labor, with the other half attributed to regulations, levies, and taxes. This challenging environment has led to work halting on thousands of homes across the capital, with development schemes being paused due to contractor insolvency or a weak sales market.

Future prospects appear uncertain, as annual planning consents for new homes dropped by 39% in the three years to the end of 2025, with construction starts down 31%. Amidst these challenges, Greater Manchester Mayor Andy Burnham has pledged to initiate a large-scale council house building program. Nathan Emerson, chief executive at Propertymark, welcomed the commitment but stressed the importance of building the "right homes in the right places at the right time," alongside continued investment in private ownership and rental sectors to meet diverse market needs.