Britain’s pledge to deliver 1.5 million new homes in this Parliament suffered a fresh blow after the country’s largest listed housebuilder reported it completed fewer homes in Labour’s first year in office than in the final year of the previous Conservative government.
FTSE 100 housebuilder Barratt Redrow said it built 16,565 homes in the 12 months to June 29, down from 17,972 in the previous 12-month period. The company has set a target to complete between 17,200 and 17,800 homes in the current year, a level that would still be below last year’s output.
Other major developers have also reported weaker production. Vistry said it built 6,889 properties in the first six months of this year, down from 7,792 over the same period before the election. Builders and analysts linked the slowdown to a mix of affordability pressures, borrowing costs and policy uncertainty.
Labour set the target of 1.5 million new homes for the life of the Parliament — equivalent to 300,000 a year — when it took office. The programme was overseen by Deputy Prime Minister and then-housing secretary Angela Rayner until she was removed from the post after failing to pay sufficient tax on her second home. Steve Reed succeeded Rayner and told officials his approach was to "build, baby, build" as he seeks to increase output.
Industry officials and analysts warned, however, that rising costs for buyers and stalled project pipelines are eroding demand. Housebuilding outside the COVID-19 pandemic is at its lowest level since 2016, official figures show, and Reed last week said parts of his plan were "dead on arrival" after a slump in planning approvals and contract awards for work to begin.
Financial conditions are also affecting the outlook. The Bank of England was widely expected to hold its base rate at 4% on Thursday, and some forecasters including HSBC said they do not expect further cuts before April. That could keep mortgage costs elevated and reduce the pool of purchasers able to buy new homes, analysts said.
Vistry’s management warned that "uncertainty" created by debate over potential property taxes ahead of the Nov. 26 Budget would further depress activity. Market commentators and some developers said hesitation over fiscal measures and housing levies was prompting investors and buyers to delay decisions.
Aarin Chiekrie of Hargreaves Lansdown said the combination of a slow start towards the 300,000-a-year target and continuing affordability pressures left the 1.5 million pledge looking "slim at best." The shortfall in completions and the factors cited by builders underline the scale of the challenge facing the government if it is to deliver on an ambitious housebuilding programme while broader economic and policy headwinds persist.