OBR warns government will not meet 1.5 million homes target
12:04 AM, 30th October 2026, 5 hours ago
The Office for Budget Responsibility (OBR) has warned the government is on course to miss its target of delivering 1.5 million homes by around 500,000.
The OBR’s economic and fiscal outlook reveals housing supply will fall from 230,000 in 2026 to 220,000 a year over the following two years.
The warning comes as housing secretary Angela Rayner has admitted there is only a “slim chance” the government will meet its target.
Pressure on housebuilding
According to the OBR’s data, there will be 190,000 fewer cumulative net additions over the forecast period.
The independent watchdog cited a range of factors, including high interest rates and regulatory changes, which have put pressure on housebuilding.
The OBR said in its report: “Higher interest rates since late 2022, alongside other affordability pressures and weak effective demand, have weighed on the commercial viability of residential development.
“Industry evidence suggests that higher borrowing costs and weaker buyer sentiment have weighed on house price growth, reducing developers’ ability to absorb rising costs.
“The weaker profile for housing supply in the near and medium term also partly reflects the cumulative effect of regulatory and fiscal changes outside the planning system over the last decade, particularly since 2019. These policy developments have increased the cost, complexity, and timescales associated with residential development.
“These include measures aimed at improving building safety, such as the Building Safety Levy and Building Safety Regulator regime, environmental requirements such as Biodiversity Net Gain and nutrient mitigation schemes, and wider fiscal measures including the residential property developer tax and higher corporation tax rates. Taken together, these measures appear to have weighed on housebuilding activity to a greater extent than we had previously assumed.”
Always a stretched target
As previously reported by Property118, speaking on Sunday with Laura Kuenssberg, Housing Secretary Angela Rayner blamed “headwinds”, including the war in Iran and rising construction costs, for making it increasingly difficult to deliver the pledge before the next election.
Ms Rayner told the BBC: “It’s a slim chance, but I’m definitely not giving up. It was always a stretched target and with the situation in the Middle East and building costs having gone up at the moment in the housing market.”
She added that Prime Minister Andy Burnham had pledged a council house-building revolution, with funding for social and affordable housing.
She added that home starts were up by 15% last year, and claimed this was making a difference.
