The number of planning permissions granted for new homes continues to fall sharply, down 20% year on year, with 2023 seeing the fewest number of sites approved since records began in 2006, according to the latest Housing Pipeline Report from the Home Builders Federation.

Planning permissions are a lead indicator of future supply levels, and the HBF says the latest housing pipeline confirms industry warnings that an increasingly anti-development policy environment, including new taxes on building and challenging conditions for homebuyers is resulting in decreased investment in future housing delivery.

The latest Housing Pipeline Report, covering the period to the end of 2023, found that number of sites that gained planning permission in 2023 dropped to the lowest level for a 12 month period since the Housing Pipeline Report began in 2006. The 10,527 sites granted permission in 2023 represented a 16% decrease on 2022; a 23% fall on 2021 levels and only around half of the average annual permissioned between 2015 and 2019 when government policies were focused on improving housing affordability.

The report also revealed that the number of units gaining planning permission in England during 2023 dropped to the lowest for any 12-month period since 2014.

At under 233,000, the volume of units approved in 2023 dropped 20% on 2022, 27% on 2021 and was down 30% compared to pre-pandemic levels, when housing delivery was increasing year on year.

The figures released yesterday come just days after the government published housing completions figures for 2023 which confirmed that the number of new homes built in Southern England were down by 13% year-on-year.

They also come just months after Michael Gove removed some fundamental planks of the (National Planning Policy Framework) planning system, in particular housing targets for Local Authorities which were aimed at ensuring councils plan for local housing needs. The two years the government spent deliberating over the changes saw 64 Local Authorities withdrew or pause their Local Plans, the vast majority of these in Southern England.

The number of plans adopted last year was the lowest for a decade. Research conducted by consultancy Lichfields warned government in advance that their proposals could cause a drop of 77,000 homes a year.

According to the HBF, the impact of the government’s ‘political’ approach on planning has hit the south of England in particular. The report shows that the number of units approved in 2023 was the lowest since 2015 in the South East, the lowest since 2013 in London and the lowest since 2012 in the South West. Year-on-year, each of these regions saw falls of 13%, 26% and 18% respectively. The same regions have already seen annual falls of more than 10% in new build completions.

While some regions saw a slight increase in the number of units approved in 2023 as compared to 2022, across the country there were significant dips when compared to 2021. Unit approvals for the North of England dropped 18% for 2023 compared to 2021, 23% for the Midlands and 28% for the South of England.

All recognised housing supply indicators are now showing falls. In the year to December the number of Energy performance certificates (EPCs – a good proxy for housing supply)being registered dropped 9% nationally, and 13% in the south of England. Both planning permissions and EPC registrations are key indicators for housing supply, tracking the same trajectories, and so these consistent drops are concerning for housing delivery in the coming months and years.

Stewart Baseley, executive chairman at the Home Builders Federation said: “Amidst a deepening housing crisis and with housebuilding levels already falling sharply, this report should send alarm bells ringing across government and the country.

“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.

“Removing the requirement for local housing needs assessments and allowing councils to ignore the housing needs of their areas has been shown by the independent Competition and Markets Authority to significantly impact housing affordability moving forward.

“Rather than listening to the hysterical demands of anti-development backbenchers, ministers would be wise to consider the plight of aspiring homeowners and act on the recommendations of the CMA to restore local housing targets and address the long-term inefficiencies of the planning process.

“The social and economic implications of driving down housing delivery are deepening, with a generation unable to access decent housing and investment in jobs and communities all suffering. Putting short term politics over the needs of the country will have long-term consequences for the economy and society.”