England's Housing Market Faces 'Jaws of Death' Crisis
The UK government's ambitious "build, baby, build" housing policy is facing a severe crisis as private developers warn they cannot deliver the promised homes. Housing Secretary Steve Reed's flagship target of 1.5 million homes by the next election appears increasingly unachievable as construction slows to its lowest level in nine years.
Official figures reveal housebuilding in England has fallen by 6% to just 208,600 homes in the year to March 2025. This leaves the government significantly behind schedule, with only 275,000 homes delivered since the election compared to the 400,000 needed to stay on track.
The Perfect Storm Squeezing Developers
Housebuilders describe being caught in what they term the "jaws of death" - a trap where construction costs are rising dramatically while house prices remain stagnant. Since September 2022, building costs have increased by nearly 13%, while average house prices across Britain have grown by less than 3%. In London, flat prices have actually decreased by 0.5%.
Steve Turner, executive director of the Home Builders Federation, told Sky News: "We're left with half of the country unviable for development projects and the other half of the country unaffordable."
The cost pressures are multiple and severe. Materials like bricks and clay products saw prices surge by over 26% in the year to August 2023. Higher interest rates since 2022 have increased development financing costs while weakening buyer demand through soaring mortgage rates.
London's Construction Collapse
The crisis is particularly acute in London, where new home construction starts plummeted to just 4,000 in the year to June 2025 - a mere fraction of the capital's 81,000 target. The government is now consulting on emergency measures including a funding package and temporary reductions in affordable housing targets from 35% to 20%.
Property developers report that new building and fire safety regulations add approximately £21,500 per two-bedroom flat in London. Community infrastructure levies add another £12,000 on average, reaching as high as £50,000 in some areas. Additional costs from a 4% residential development tax and building safety levy are expected soon.
Nick Cuff, managing director of Urban Sketch, explained: "The viability of sites is very, very strained and is snuffing out general supply of new homes from the UK's housing pipeline. We're effectively seeing a cessation in development activity because it cannot support the requirements that government is placing on it now."
National Impact and Industry Concerns
Analysis by Zoopla finds that building is not viable in nearly half of England because home sales values fall below delivery costs. Research firm Molior separately discovered that housebuilding would remain unviable in half of London even if all housing and infrastructure contribution requirements were removed.
The situation creates a geographical mismatch - areas where building is viable tend to be where people cannot afford to buy, while affordable areas are often unviable for development.
While planning reforms have been welcomed as "very positive," industry leaders say they only address one side of the equation. Steve Turner of HBF emphasised that the government "needs to find a way to support buyers, which will then create confidence with house builders that ultimately they can sell the product they deliver."
There are concerns about potential quality compromises. Rachael Williamson of the Chartered Institute of Housing warned: "We've got to manage the tension between safety and costs without saying 'let's cut corners'. History tells us where you get to with that."
As the housing crisis deepens, the government faces the difficult task of balancing safety standards, affordability targets, and development viability while trying to rescue its ambitious housing targets from what developers describe as an increasingly impossible situation.
