Britain’s biggest housebuilders were full of optimism in 2024 when the new Labour government pledged to build 1.5m homes in its first five years. However, just two years later, Kier Starmer is on his way out and that optimism has all but vanished. The industry has been bludgeoned by tax rises, soaring build costs, hesitant buyers and political uncertainty.

It comes as no surprise to hear that shares in the major UK housebuilders have slumped to their lowest level in a decade and profit forecasts are being slashed by a new housebuilder almost weekly.

As always, the major problem, for any business, is reduced demand. Three successive inflation shocks triggered by the pandemic, the Ukraine war and now the Iran conflict have led to persistent high mortgage rates. As a result, mortgage approvals fell to 56,200 in May, according to Bank of England data, marking the lowest level since December 2023 and below the six-month average of 63,300.

Supply of new-builds hits a 10-year low
The number of new-build housing developments coming to market is now at its lowest level in almost a decade, according to analysis by Rightmove, which has tracked for-sale listings on its platform for more than 10 years.

The firm looked at whole developments coming on to the market rather than individual homes or plots. It found there were fewer in May than since January 2017. However, across the entire market, which includes new and existing homes, the number of properties for sale was up by 85% compared with four years ago, according to the property platform.

Colleen Babcock, Rightmove’s property expert, says: “Despite the historically high number of available homes for sale, there is still a long-term shortage of affordable homes in the right place. We need more homes to support people at every stage of the moving journey, from first-time buyers to downsizers.”