Labour predicted to miss 1.5 million homes target

Labour is expected to fall short of its goal to build 1.5 million new homes by the end of its current parliamentary term. Chancellor Rachel Reeves acknowledged this challenge during a statement today. The Office for Budget Responsibility (OBR) estimates that only 1.3 million homes will be constructed by the financial year 2029-30. This is despite the government’s efforts to ease building restrictions on certain green belt areas. Additionally, rising mortgage rates are anticipated, with an average peak of 4.7% expected in 2028. Home prices are also on the rise, with the OBR projecting the average home price to increase from £265,000 in late 2024 to about £295,000 by 2029. Planning reforms are likely to only slightly control price increases, reducing them by about 0.8% by 2029. Reeves defended Labour’s approach, stating that their reforms would significantly enhance economic growth. She mentioned that by 2029-30, real GDP would see a boost due to these policies. The government's updated planning rules focus on developing previously used sites before touching on green belt land. Councils will be required to review and potentially adjust their green belt boundaries to meet housing targets. Despite a projected growth in household disposable income, experts warn that living standards may stagnate. Factors such as increased taxes and slow wage growth could hinder financial improvement for many families over the next few years.