London | ReNews Pakistan
England’s housing sector has entered a period of significant slowdown, with new home construction dropping to its lowest level in a decade during 2025 and the first quarter of 2026. The decline is intensifying the housing crisis while also weighing on economic growth.
Despite government claims of planning system reforms, the number of homes built has fallen to its lowest level since 2015. Only around 180,000 homes received construction approval, while the rate of new project starts remains nearly 30% below levels recorded between 2016 and 2019.
The slowdown is also having a visible impact on the broader economy. According to the latest data, construction output declined by 2% in the most recent quarter, contributing to a modest GDP growth rate of just 0.2%.
While government efforts have largely focused on boosting housing supply, experts are increasingly calling for measures to stimulate demand, particularly through the introduction of a new buyer support scheme.
Developers are reluctant to invest in new projects without confidence in strong market demand. In many parts of the country, slow sales rates are discouraging the launch of new housing developments.
According to analysis by property consultancy Savills, reintroducing a scheme similar to “Help to Buy” could enable approximately 375,000 renters to purchase homes, provided they can arrange a 5% deposit. At full capacity, such a scheme could generate around 35,000 additional home sales annually.
Previously, the Help to Buy scheme supported one in every three new home sales between 2015 and 2023, providing a significant boost to the housing market. The scheme has faced criticism for allegedly inflating house prices and benefiting large developers. However, evidence suggests its overall impact on prices was limited.
Even at its peak, the scheme facilitated around 50,000 transactions per year, representing only a small fraction of the 1.1 million total housing transactions in England. A report by the National Audit Office found that new-build homes were typically priced around 20% higher than existing properties, consistent with long-term trends. Between 2013 and 2018, buyers using the scheme paid less than 1% more than those purchasing similar homes without it.
However, regional disparities were observed in London, where equity loans of up to 40% were available. This led to faster price growth in outer London compared to nearby areas with lower levels of support.
Experts stress that any new scheme must be carefully designed to avoid past shortcomings. Key recommendations include prioritising first-time buyers, introducing income caps, and ensuring consistent loan structures across regions.
They also emphasise the need for property value caps aligned with local market conditions to minimise the risk of price distortions. Analysts believe that a well-targeted buyer support scheme could significantly boost housing supply, expand homeownership, and provide much-needed support to the economy.