The government target of building a million new homes in the next five years was always going to be a major challenge, but the Covid-19 pandemic has dealt a heavy blow to that ambition.

With housebuilders failing to develop enough new homes, there is an affordability crisis emerging once more, not to mention overcrowding in many parts of the UK, especially in England.

Residential property price growth hit a four-year high last month as pent-up demand and the stamp duty holiday continues to boost the property market, according to Nationwide.

The lender’s latest house price index shows that average property values grew by 5% annually in September and 0.9% on a monthly basis to £226,129.

It is the highest level of annual price growth since September 2016.

To help fix the dysfunctional housing market and make properties more accessible, the Conservatives, in their election manifesto last year, promised to increase housebuilding levels by delivering an average of 300,000 new build homes a year by the mid-2020s.

But the latest data, collated by the Ministry of Housing, Communities & Local Government, and which is for England only, shows that building work started on 15,930 dwellings in the three months from April to the end of June, down from 33,188 between January and the end of March when Covid restrictions were introduced.

Housing starts are 67% below their Q1 2007 peak and 7% below the previous trough in Q1 2009, the latest quarterly figures reveal.

There were 121,630 estimated new build dwellings starts in the year to June 2020, down 26% compared to the year to June 2019.

An estimated 147,180 new build dwellings were completed in the year to June 2020, a decrease of 15% compared to the year to June 2019.

Clive Docwra, managing director of construction consultancy McBains, commented: “The industry is now facing a double-whammy – trying to recover from the impact of Covid but also suffering from the uncertainty over a Brexit deal – with investors holding off putting money into new developments until the picture on a withdrawal agreement becomes clearer.

“The government will no doubt point to its recent planning White Paper as the answer to building more homes, saying that it will mean ‘permission in principle’ will be given to developments on land designated for renewal to speed-up building, but the uncertainty and resulting fluctuating values driven by Covid and Brexit are reducing the incentive on developers to build in the short term.

“The government could address this by temporarily staggering or deferring Section 106 planning obligations – where developers are asked to provide contributions for community infrastructure – so that developers are encouraged to complete housebuilding projects as soon as possible.”

Aside from set a target of delivering significantly more new homes annually, the government has also set ambitious new environmental targets that property developers must seek to meet.

It was announced last week that a Delivery Hub will be set up by a new cross sector Future Homes Task Force, comprising of representatives from across all the sectors that shape new homes including government, housebuilding, utility provision, material suppliers and environmental groups, with a view to meeting a series of high-level ambitions in a realistic and deliverable way, ensuring that future new build homes are far more energy efficient.

The Delivery Hub will develop planning for a broad range of interlinked climate, natural environment and resource targets that will need to be met to meet the ultimate objective of net zero.

Stewart Baseley, executive chairman at the Home Builders (HBF), said: “The environmental agenda is an absolute priority for the UK’s house building industry and one on which we are committed to leading the way.

“We have been set a huge challenge by government, but it is one we are determined to deliver. We will work with government and stakeholders to set ambitious but deliverable goals that will ensure we make our contribution to environmental targets and achieve our ambition of net zero homes and a net zero industry.

“The work of the Task Force will help deliver homes that we can all be proud of as a nation and future generations will thank us for.”