Shock data reveals home building unviable in half England

Building new homes is not financially viable across large swathes of the country, with new analysis from Zoopla revealing a fundamental affordability gap that threatens to undermine Labour’s flagship housing policy.

The research shows home building is unviable in 48 per cent of England and challenging in almost two-thirds of it.

The news comes just days before Labour’s conference, where housing delivery will dominate discussions with six separate sessions set to address how to speed up the delivery of 1.5 million new homes.

While the Government says it wants to ‘build baby build’, our analysis shows that this can only be currently achieved across half the country, in areas that are typically more expensive for consumers to buy.”

Richard Donnell, Executive Director at Zoopla (pictured), says: “While the Government says it wants to ‘build baby build’, our analysis shows that this can only be currently achieved across half the country, in areas that are typically more expensive for consumers to buy.”

According to the data, there is a major disconnect between viability and affordability – in areas where it is viable to build homes, buyers cannot afford them, and where homes are affordable for buyers, builders cannot make the finances for developments stack up.

Build costs have risen 17 per cent since 2022, while sales prices have increased by just one per cent, creating an impossible equation for developers in much of the country.

And there is a clear north-south divide. Two-thirds of southern England have sales prices that support development costs, compared to just 13 per cent in the Midlands and 10 per cent in the North.

affordability squeeze

Donnell says: “It is much harder for builders to build homes where it’s affordable for home buyers to buy.”

He adds that the affordability squeeze has been worsened by the ending of Help to Buy and rising mortgage rates, while demand from housing associations has dropped due to building safety costs and higher borrowing rates.

Planning permissions, which offer the best indication of the programme’s progress, have fallen to their lowest level since records began, down 23 per cent since 2022. And, to compound Labour’s problems, in its own constituencies, 37 per cent of its housing targets are rated as unviable for development.

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Author: Gemma