Savills has launched its latest forecast for housebuilding completions, which predicts that housebuilding volumes will not recover to pre-pandemic volumes until 2026.

Somewhat concerningly, Savills predicts that delivery will be 60,000 below the government’s stated 300,000 homes per year target.

The figures show that delivery peaked in 2019/20 at 220,000 homes and fell to 190,000 in 2020/21. Volumes are expected to sink to 180,000 in 2021/22 and only recover 2019/20 volumes in 2026.

Starts slowed due to Covid but were already falling pre pandemic, in part because housebuilders began to anticipate the end of Help to Buy, often shifting focus to smaller sites deliverable before the end of the scheme.

Also, sites gaining permission have been skewed to lower demand markets, with supply highly constrained in high demand locations.  Renewed Government commitment to delivering more homes in the north of the country suggests this is unlikely to change.

Over the past 50 years unsupported – ie without schemes such as Help to Buy – new build sales have run at about 10% of all housing transactions in England.  Transactions are expected to settle around 1m, which suggests unsupported market sales of 100,000 a year.

Section 106 accounted for 56% of all affordable homes delivery in 2019/20.  As market volumes fall, it is only expected to deliver just over 25,000 homes a year over the next five years, increasingly incorporating First Homes.  But overall, Savills expect affordable housing delivery to increase to 60,000 per year, from an average of 47,000 a year over the past five years.

The government’s Affordable Homes Programme (£12bn investment, 2021-2026) will play a critical role, as will the commitment of housing associations to maintain investment in new homes, the expanded investment from local authorities and the rapid expansion of private capital flows into affordable housing.

Build to Rent is the only part of the private housebuilding market we expect to be significantly bigger in 2025/26 compared to 2019/20.  Delivery rose from 7,000 to 14,000 between 2016/17 and 2019/20.  A further doubling would give us an expected 30,000 homes within five years, equivalent to 14% of all new homes completed in 2025/6.  There may be opportunities for the sector to expand further, certainly tenant demand is not lacking.

Emily Williams, associate director of research at Savills, commented: “Despite the upcoming end of Help to Buy, there remains considerable appetite for new homes, and we expect delivery of affordable and private rental stock to expand to fill the gap left by Help to Buy.

“But the ability of developers and investors to build new homes is currently being limited by a lack of suitable consented land. There needs to be a continued effort to deliver more consents in high demand areas in order to be able to meet the target of 300,000 new homes per year.”