The pipeline of new home development in the UK is facing a sharp downturn, according to the latest figures from the Home Builders Federation (HBF). The report, a bellwether for future housing supply, paints a bleak picture, with planning permissions for new homes tumbling to their lowest since records began in 2006. This decline signals a troubling trend for aspiring homeowners and developers alike, highlighting a pressing need for policy reassessment.

A Record Low in Housing Approvals

The HBF’s Housing Pipeline Report reveals a stark 20% year-on-year drop in planning permissions for new homes, marking 2023 as the year with the fewest approved sites since 2006. This significant decrease reflects the impact of an anti-development policy environment, including new taxes on building and challenging conditions for homebuyers. The outcome is a decrease in investment towards future housing delivery, exacerbating the housing shortage.

The Numbers Tell the Tale

The report underscores a worrying trend across various metrics:

• Only 10,527 sites received planning permission in 2023, a 16% decline from 2022, and a massive 23% fall from 2021. This figure is roughly half the average annual permissions granted between 2015 and 2019.
• Planning permissions for housing units in England dropped to under 233,000 in 2023, the lowest annual figure since 2014. This represents a 20% decrease from 2022, a 27% drop from 2021, and a 30% fall compared to pre-pandemic levels.

These declines come in the wake of government statistics confirming a 13% year-on-year decrease in new homes built in Southern England for 2023.

Policy Changes and Their Impact

Recent policy shifts have directly contributed to this decline. Notably, Michael Gove’s removal of key aspects of the National Planning Policy Framework, including housing targets for local authorities, has led to a significant number of Local Authorities either withdrawing or pausing their Local Plans. This action has particularly affected Southern England, further straining the housing market.

Lichfields consultancy’s research had previously warned the government of a potential drop of 77,000 homes annually due to these policy proposals. Now, the HBF report highlights the dire reality of these predictions, especially in the south where approved units have plummeted to their lowest levels in nearly a decade across several regions.

The Call for Policy Reversal

Stewart Baseley, executive chairman at the HBF, has issued a stark warning in light of these figures, “As we have been warning for some time, the sharp decline in housing supply is the inevitable result of several years of anti-growth policy and rhetoric. The politically driven weakening of the planning system will impact housing supply for years to come and needs to be urgently reversed. Allied to the total lack of support for buyers in the Budget and the resultant impact on demand for new homes, it is an increasingly gloomy climate for industry and for a generation still clinging to the dream of home ownership.”

The removal of local housing needs assessments and the ability for councils to overlook their area’s housing requirements have significantly hampered housing affordability. Baseley urges the government to heed the recommendations of the Competition and Markets Authority, reinstating local housing targets and addressing inefficiencies within the planning process.

A Generation at Risk

The consequences of declining housing delivery extend beyond the construction industry, impacting a generation’s access to decent housing, jobs, and community investment. Baseley warns that prioritising short-term politics over the country’s needs will lead to long-term economic and societal challenges.