UK housebuilding targets are on shaky ground due to economic viability challenges facing property developers, warns Colliers – the latest indication that the government's ambitious housing plans may be harder to achieve than anticipated. Andrew White, head of UK residential at Colliers, believes that while planning reforms might gain momentum under the new government, the fundamental economics of residential development have fundamentally shifted.
Mr White highlights that slower sales rates for new-build properties are a reflection of commercial realities rather than a reluctance from housebuilders to construct homes. Developers must adapt their construction pace to market demand; when sales slow, build-out rates inevitably follow suit.
The consultancy has identified several factors exerting pressure on new housing schemes, including rising build costs, expensive development finance, lengthy planning delays, and an array of regulatory requirements. A general slowdown in UK house price growth adds additional strain to the viability of new projects, compounding the effect of these market conditions even with improved planning processes.
Mr White points to the cumulative impact of policy obligations such as affordable housing contributions, Section 106 agreements, CIL, Biodiversity Net Gain, and updated building safety legislation. These requirements serve legitimate objectives but have introduced substantial cost and complexity into residential development. The solution lies in acknowledging their combined effect on project viability rather than abandoning environmental or quality standards.
While planning reform is essential for boosting market confidence, Colliers believes it alone will not unlock the level of housing delivery the government seeks. Mr White concludes that increasing affordability, providing policy certainty, supporting infrastructure investment, and maintaining development viability awareness are equally crucial to achieving a sustained increase in housebuilding targets.