The UK's New Housing Target

The UK has a housing crisis, consistently failing to build enough new stock in line with government targets. In a series of six posts, we run through the numbers on the wider impact this has had and what can be done about it. But what is the basis for the New Homes Target?

The current official target for building new housing in England is 300,000 dwellings per year, but the true requirement is widely estimated to be in excess of that. It’s a number that has become highly politicised in the last two decades, so here’s a quick history lesson with data.

In the early 1980s, the UK had an excess of housing supply thanks to a post-war building boom underpinned by a government-funded programme for the provision of social housing. The turning point was the 1980 Housing Act which introduced the ‘Right to Buy’ for tenants to own their own council house or flat. Given the surfeit of social housing at the time, it could easily be argued it was no bad thing. However, in 1981 strict limits were placed on councils using the proceeds of sales to build new dwellings. That, alongside liberalisation of the mortgage market, is the ‘ground zero’ of the current housing crisis. Social housing was sold into private ownership, the building of new stock generally declined, and the advent of cheap mortage deals stoked demand.

House prices began to rise quickly over the next two decades. Concerned about the affordability of homes relative to the slower rise in average earnings, Bank of England economist Kate Barker was appointed to conduct the ‘Review of UK Housing Supply’ which reported in March, 2004 [1].

Over the previous 30 years, the UK had experienced average annual growth in real-term house prices of 2.4%, compared to the EU average of 1.1%. To counteract this, the Barker Review introduced an annual new homes target. This was the number of new homes that needed to be built every year to bring price growth closer to a healthier 1.1%. It calculated that the number of new homes required to be built was 120,000 every year.

What has happened since…

The above graphic shows key dates when the target was revised (the x axis), the required number of new homes estimated to be built each year (the bubbles and their size), and the estimate for how many years that pace of build needed to be maintained (y axis).

Housing Green Paper - July, 2007. The Brown Government published revised targets [2], stating the requirement was to deliver 2 million new homes by 2016, and hit a total of 3 million by 2020.  Rising from 200,000 per year, it targeted an annual run rate of 240,000 new homes by 2016 - as it turned out, the targets were missed in every subsequent year from 2008 to 2016.  

DCLG Household Projections - Nov. 2010. Another revision after government research reported that the number of households in England would grow from 21.7m in 2008 to 27.5m by 2033 [3]. That would mean accommodation for an average 232,000 new households every year. This became a new reference point when estimating housing targets in future.

Since then, the New Homes Target seems to have been under regular review and challenge… 

May Government White Paper - Feb., 2017. A plan for 1 million new homes to be delivered in 4 years, so at least 250,000 per year, but before this White Paper was even published, the House of Lord's Select Committee on Economic Affairs reported in Nov. 2016 that,

"The Government’s target of one million new homes by 2020 is not based on a robust analysis. To address the housing crisis at least 300,000 new homes are needed annually for the foreseeable future." [4]

National Housing Federation report - May, 2018. This research just over a later by the NHF and Heriot-Watt University put the requirement at 340,000 per year until 2031 [5]. It was not officially endorsed by government, but is a robust example of just how far away from reality the official New Homes target had likely become.

The ‘300,000 per year’ number was eventually accepted in the 2019 Conservative manifesto as the annual target to be achieved “by the mid-2020s”[6]. Despite strong evidence that the current annual requirement is now much higher, the Labour Government of 2024 is aiming for this same 300k target over the course of the next Parliament.  

notes & sources

1. Barker Review, 2004 https://en.wikipedia.org/wiki/Barker_Review_of_Housing_Supply

2. ‘Homes for the Future: more affordable, more sustainable’ Green Paper, July, 2007

3. Household projections (2008 to 2033) in England. Nov., 2010.

4. Fixing our Broken Housing Market, White Paper Feb.2017 (mainly developed in 2016).

5. H of L Select C’ttee on Economic Affairs,

6. "Housing Supply Requirements Across Great Britain for Low-Income Households and Homeless People." report by Heriot-Watt University, commissioned by National Housing Federation and Crisis. May, 2018.

7. Conservative Party manifesto, 2019

8. Labour conference announcement Oct., 2023