The forecast from Savills Research showed that housing delivery will fall well below the government’s target of 300,000 new homes completed each year.
Although broadly in line with the 20-year average for delivery, Savills projected that England is expected to deliver 837,500 new homes in total over the five years.
However, low levels of planning consents and new starts will constrain the development pipeline over the next two years, and affordability pressures are expected to weigh on demand.
The latest figures show new home completions fell by 4.1% to 190,602 in the year to March 2025, meaning completions have dropped by 10.2% in the two years since the Help to Buy scheme ended.
Savills estimated 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.
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Supply and demand pressures
A combination of supply- and demand-side pressures are behind the weaker outlook.
On the supply side, annual full planning consents for new homes fell by 39% in three years to around 180,000 in 2025, while starts are down 31% and Energy Performance Certificates (EPCs) for new homes fell by 16% in the three years to December 2025.
Looking to demand, affordability remains stretched and developers are grappling with a mismatch between rising costs and more subdued house price growth.
Savills said development viability is the key challenge. In the four years to February 2026, build costs rose by 17.5%, while house prices increased by just 4.5%, making it increasingly difficult for schemes to get off the ground.
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, while a higher success rate at appeal suggests recent reforms are beginning to result in more positive decision-making. However, Savills said it will take at least 18 months for this to feed through to higher completion volumes.
Emily Williams, director of residential research at Savills, said: “England’s housing delivery has proven to be reasonably resilient in the face of recent economic headwinds, but the underlying picture is becoming increasingly challenging.
“Low levels of planning consents and starts mean a thinner pipeline of homes under construction, while affordability pressures, higher interest rates and rising development costs are constraining demand and viability.”
