Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.

Savills Forecasts Major Shortfall in Government New Homes Target

Savills has forecast that only around half of the UK government’s annual target of 300,000 new homes will be completed each year over the next five years. The estate agency predicts housebuilding completions will average 167,500 per year between now and 2029/30, which is 56% of the target.

Savills projects that England is expected to deliver 837,500 new homes in total over the five years to 2029/30. This figure is broadly in line with the 20-year average for delivery, but falls significantly short of government ambitions. The most challenging period is expected over the next two years, as low levels of planning consents and starts constrain the development pipeline and affordability pressures weigh on demand.

The latest figures show new home completions fell by 4.1% to 190,602 in the year to March 2025, a drop of 10.2% in the two years since the Help to Buy scheme ended. Savills estimates around 189,000 new homes were built in 2025/26, but expects output to fall sharply over the next two years, to just over 150,000 homes in both 2026/27 and 2027/28.

The report identifies a combination of supply and demand-side pressures behind the weaker outlook. On the supply side, annual full planning consents for new homes have fallen by 39% in three years to around 180,000 in 2025, while starts are down 31% and energy performance certificates (EPCs) for new homes have fallen by 16% in the three years to December 2025. On the demand side, affordability remains stretched and developers are grappling with a mismatch between rising costs and more subdued house price growth. Savills notes that development viability is a key challenge, with build costs rising by 17.5% in the four years to February 2026, while house prices increased by just 4.5%.

Despite the weaker short-term outlook, the report points to some early signs of improvement in the planning system. Residential applications rose by 44% in the last year, back to levels seen in 2022 and 2023, and a higher success rate at appeal suggests recent reforms are beginning to result in more positive decision-making. However, Savills says it will take at least 18 months for this to feed through into higher completion volumes.

The analysis also highlights shifts in delivery by tenure. Savills expects unsupported private sales to average 102,700 a year over the next five years, Build to Rent completions to average 14,500 a year, grant-funded affordable housing to average 29,200 homes a year, and Section 106 affordable housing 21,000 homes a year—19% lower than the previous five years.

Savills also states that a buyer support scheme could materially improve delivery. If introduced now, such a scheme could support 85,000 completions by the government’s March 2029 deadline for their 1.5 million home target, and 120,000 within the report’s forecast window, with 92,000 of those homes estimated to be additional.