Is the government going to meet its target of 1.5 million new homes?

September 5, 2025

The government began its term in office with an ambitious promise: To build at least 1.5 million new homes in the UK by the end of the current Parliament. The pledge was made in response to low construction rates and a perceived need to build a huge number of new homes to meet the demand for housing in this country.

The lack of supply and the growing demand for homes are the crucial factors defining the UK property market. So, if the government could increase construction rates, the results would have an impact on all homeowners and renters in the UK.

But are they going to manage it?

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Is the government on track to meet its housebuilding target?

The short answer is no. The government is currently not on track to meet its targeted number of new homes. Building 1.5 million new homes in five years would mean the completion of 300,000 homes per year. That is a rate which has not been achieved since the 1960s.

Estimates from the Office for Budget Responsibility (OBR) in Q1 2025 showed that the government is not close to that level of construction at the moment. Reforms have made an additional 170,000 new homes possible, but that will not be enough to hit the extra targets at the current rate.

That is in spite of major improvements in the pace of planning and construction overseen by the government. Homes England estimates:

Completions are up 14%
New starts are up 6%
Land has been unlocked for an additional 79,000 homes

Additionally, the OBR does concede that the rate of housebuilding has reached a 40-year high, and the planning reforms could add £6.8bn to the economy. The fact that this can be true and the government is still not able to meet its target shows the scale of the supply issue in the UK.

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Are the current housebuilding figures accurate?

Another potential problem for the government is the questions around the accuracy of data. Savills is one voice raising some issues with the OBR’s data. Firstly, the agency notes that the government’s targets are just for England, yet the OBR’s estimate that 1.3 million homes can be delivered by 2029 covers the whole of the UK. In fact, it is likely that just 1 million of those homes will be in England – 500,000 fewer than the target.

Secondly, Savills believes that the OBR is using historically high numbers for its estimates. For example, they are assuming 1.2 million house sales in 2030, of which 160,000 will be new build homes. This would be more than the average over the 2010s, where 1 million homes were sold per year, and the number of those that were new builds was approximately 10%. If that trend were to hold, it would mean just 100,000 new builds per year – one third of the government’s target.

However, the government has pointed out:

Housebuilding rates are now higher than in the 2010s
Mortgage costs are falling thanks to the Bank of England cutting the base rate of interest
Billions of pounds are being allocated to new housing
Planning reforms are making it easier and faster to build

A spokesperson from the Ministry of Housing, Communities and Local Government (MHCLG) said: “We are exploring plans to go further by making it easier to intervene where councils consistently make poor quality decisions about planning applications and prevent the delivery of the homes and infrastructure we need. This will help to get Britain building again and restore the dream of home ownership.”

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How will this affect the UK property market?

If the government cannot meet its housing targets – and all signs say it can’t – then we are likely to see the demand for new housing keep growing. The latest Zoopla House Price Index from August 2025 shows that buyer demand in the UK has increased by 4% in the last year.

Staying with Zoopla, the agency’s rental index shows rents have gone up 31% in three years, thanks to the high demand for rental homes. This year, they are expected to grow another 5% on average.

There are simply not enough homes to go around, and that will be true even if the government does somehow manage to meet its housing target. In some areas, like the North West, demand is even higher than the rest of the country.

The Centre for Cities estimates that we could need as many as 6.5 million additional homes to meet the demand built into the market.

All of that together means two simple things:

House prices are going to keep increasing
Rents are likely to keep going up

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What does a lack of housing supply mean for investors?

For buy-to-let investors, the lack of available housing supply and the low construction rates mean that buying property sooner rather than later is the smart move. House prices and rents are forecast to keep going up in the next four years by all major research agencies – the same timeline as the government is predicted to miss its housing targets.

That means those who buy in 2025 are likely to have four full years of growth ahead of them at an absolute minimum. With no end in sight for the UK’s housing crisis, property is likely to continue growing and becoming more profitable over the 2030s and beyond.

This is an investment that has proven itself over decades. If the UK government wants to fix the underlying supply issue that is causing house price and rental growth, the solution will also have to be measured in decades. In the meantime, investors will have many years of income and capital gains to look forward to.

Want to learn more about investing in UK property and develop a strong investment strategy? Contact our team today to discuss your financial goals and how property can help you achieve them.