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The hidden cost of Labour’s failing 1.5m housebuilding target is about to get worse
Developing
In Short: Britain's economic watchdog may revise down its growth forecast due to Labour's slim chance of meeting its 1.5 million housebuilding target.
Britain's economic watchdog is reconsidering its growth forecast due to Labour's slim chance of meeting its 1.5 million housebuilding target by 2029, The i Paper reported. According to government estimates, only 300,000 homes were added to the housing stock in the first 18 months of the new parliament, nearly a third short of the required number.
Developers have warned the Office for Budget Responsibility (OBR) that the housing target will not be met. Housing and Planning minister Matthew Pennycook acknowledged that the 1.5 million pledge was “stretching” at the end of 2025. He attributed the slow start to the “legacy” of low Conservative housebuilding figures.
Rising inflation and borrowing costs, partly due to uncertainty around Andy Burnham’s spending plans, have created what one analyst called “the most dysfunctional housing market in decades.” Mortgage rates have already started to spike because the cost of government borrowing has surged recently.
The OBR is evaluating the impact of the Planning and Infrastructure Act and the recent £10 billion announcement for social and council housebuilding across England. A lower growth score could further increase mortgage rates and deter investors in housebuilding, potentially stalling the supply of new homes.
The OBR considers a broad range of economic indicators, including population growth, employment rates, productivity, wages, inflation forecasts, and government tax and spending plans, when drawing up its growth forecasts. Housing targets and planning policy also influence long-term growth forecasts.
The housing analyst noted that Labour’s target was always “unachievable” due to high house prices and rising builders’ costs, even before the general election.
What's still developing
- Nothing material beyond the confirmed record.
Sources
- The i Paperlink