New build: Policies, progress & the path ahead
By Barclays
As government efforts to expand housing supply continue to gain momentum and February’s New Homes Week 2025 sparking fresh discussion, the new build sector stands at a pivotal moment. With a strong start to the year in both the housing and mortgage markets, it’s the perfect time to assess what’s next.
Shaped by evolving policies, economic trends, and shifting buyer needs, the sector is continuously progressing. Lender innovation and industry partnerships remain key drivers in improving access to homeownership and ensuring the market adapts to future demand.
According to the Construction Products Association, construction output is projected to grow by 2.1% in 2025, rising to 4.0% in 2026, signalling a gradual recovery from recent economic pressures, particularly in the private housing sector.
Building control data from the Housing supply: indicators of new supply, England: July to September 2024 report, produced by the Ministry of Housing, Communities and Local Government, also points to a positive trajectory, with 29,310 dwellings started between July and September 2024. This represents a 17% increase on the previous quarter and a 38% rise compared to the same period last year.
Balancing supply and demand
Although challenges remain evident, planning constraints continue to be a major obstacle in expanding the supply of new housing. However, there may be light at the end of the tunnel. From unblocking stalled sites to setting achievable local targets, changes to planning regulations could provide much-needed relief. The revised National Planning Policy Framework aims to address some of these challenges by reducing delays, enhancing infrastructure capacity, and improving local authority efficiency. Additional staffing and streamlined processes at local planning offices will also prove essential in effectively meeting any new housing targets.
A significant step in this direction is the recently announced Planning and Infrastructure Bill, which seeks to accelerate the delivery of new homes and critical infrastructure. The Bill focuses on five key objectives: delivering a faster and more certain consenting process for critical infrastructure, introducing a more strategic approach to nature recovery, improving certainty and decision-making in the planning system, unlocking land and securing public value for large scale investment, and introducing effective new mechanisms for cross-boundary strategic planning. By addressing long-standing barriers, these reforms could provide the much-needed boost to housing delivery while ensuring environmental and economic considerations remain at the forefront.
Despite supply being an ongoing concern, ensuring consistent demand is equally critical. Affordability remains a key issue for prospective homeowners, with financial confidence heavily influencing purchasing decisions. As we’ve seen historically, when demand significantly outpaces supply, house prices surge, impacting affordability. Therefore, it’s vital that any support measures must be introduced at the right time, in the right form, with the right level of due diligence undertaken to maintain a stable market.
Innovation in housing and mortgage products
With the Help to Buy scheme no longer dominating the market, innovation is now at the forefront of efforts to support homebuyers. Lenders and developers alike are introducing new products and initiatives to improve accessibility. Shared ownership, Deposit Unlock, and lender-led schemes are helping more first-time buyers onto the property ladder. The introduction of more energy-efficient mortgage products also aligns with the growing consumer demand for sustainable homes.
In addition, the Future Homes Standard (FHS), which will impact new build regulations, remains a crucial consideration for housebuilders. While the consultation closed in March 2023, a change in government raises questions about how the FHS will be implemented. Nonetheless, many developers are already prioritising energy efficiency, recognising that a large number of buyers see it as a significant factor in their homebuying decisions. And further consumer education on the long-term cost and environmental benefits of new builds compared to retrofitting older properties will be essential in driving demand.
While economic conditions and policy reforms will influence progress in the new build sector going forward, the industry’s focus on innovation and sustainability positions it for strong future growth. And, as 2025 unfolds, intermediaries will be key in guiding buyers through an evolving landscape, ensuring they have access to the right products and support for a smoother path to homeownership.
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