Savills has predicted that only half of the government’s target of 300,000 new homes will be completed each year over the next five years.
The housing agency predicts that housing completions will average 167,500 per year between now and 2029/30, which is just 56 per cent of the target.
Although broadly in line with the 20-year average for delivery, Savills projects that England will deliver 837,500 new homes in total over the five years to 2029/30.
A more challenging period is expected to come in the next two years as low levels of planning permission and starts squeeze the development pipeline and affordability pressures weigh on demand.
The latest figures show that new home completions fell by 4.1% to 190,602 in the year to March 2025, a 10.2% drop in the two years since the Help to Buy scheme ended.
Savills estimates around 189,000 new homes in 2025/26 but expects output to slow significantly 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 weak outlook.
On the supply side, full-year planning permissions for new homes fell by 39% in the three years to around 180,000 in 2025, while starts fell by 31% and energy performance certificates (EPCs) for new homes fell by 16% in the three years to December 2025.
On the demand side, affordability remains stretched and developers face a trade-off between rising costs and depressed house price growth.
Savills says the success of the development is a major challenge.
In the four years to February 2026, construction costs have increased by 17.5%, while house prices have increased by only 4.5%, making it very difficult for projects to get off the ground.
Despite the weak short-term outlook, the report points to some early signs of progress in the planning process.
Residence applications rose by 44% last year, returning to levels seen in 2022 and 2023, while the high success rate in appeals suggests that recent changes are starting to lead to better decisions.
However, Savills says it will take at least 18 months for this to translate into higher volumes.
Housing research director Emily William says: “Housebuilding in England has proved reasonably strong despite recent economic conditions, but the underlying picture is becoming increasingly challenging.
“Low levels of planning permission and starts mean a reduced pipeline of homes being built, while affordability pressures, higher interest rates and rising development costs are putting pressure on demand and activity. The result is that completions are likely to fall sharply in the short term, as our forecast points to just 152,000 new homes in 2026/27.
“There are encouraging signs early in the planning process, but it will take time for those improvements to materialize. For now, rising demand remains the clearest policy path to easing supply.”
“The analysis also highlights changes in delivery over time. Savills expects unfurnished private sales to average 102,700 a year over the five years to 2029/30, down from 107,500 five years ago, while Build to Rent completions are forecast to average 14,500 a year, compared to 15 previously.
“Subsidized affordable housing is estimated at 29,200 homes per year, while Section 106 affordable homes are 21,000 homes per year – 19% less than five years ago.
“Savills also says that the customer support system can improve the delivery of services.
“If introduced now, the new plan could support 85,000 completions by the government’s March 2029 deadline of 1.5 million homes, and 120,000 within the report’s forecast window, with 92,000 of those homes estimated to be added.
“Under that scenario, housing completions could increase to 198,000 homes a year by 2028/29, which, although still below the government’s target, would be enough to maintain housing construction at the rate seen over the past decade despite current conditions.”
