Housebuilding targets in the UK are being held back by planning permissions, according to research from Investec.
The Government set a target of 1.5 million new homes by 2030, which is a 50% increase on previous goals.
Fewer planning permissions are threatening progress on this, according to its ‘UK Housebuilding: Challenges and Opportunities’ report.
In 2024, 241,000 homes in England got planning permission, down 3% on the year before.
The shortfall is sharpest in the South East.
In London, just 32,160 homes were delivered in 2023, less than half the amount needed.
However, the report found some positives, with construction cost inflation slowing to 2% in 2024, down from 15% in 2022 and 10% in 2023.
Land prices in urban brownfield and prime central London areas peaked in 2021 and 2022, then fell in 2023, which may make land cheaper for builders.
Aynsley Lammin, equity analyst, building and construction at Investec, said: “While we are currently not seeing the levels of construction needed to achieve the government’s targets, there are some positive signs in the market, with both land prices and cost inflation in construction beginning to normalise to pre-pandemic levels.
“As well as costs, the adoption of a partnership model—where local authorities and developers work together—may accelerate building levels.
“These collaborations reduce development risks and capital requirements, allowing for a more flexible approach to delivering new homes.”
Lammin added: “By leveraging co-investment from housing associations and institutional investors, we can create a capital-light growth model that helps unstick the housebuilding process.”
