What are the prospects for the new build market in 2021?

property investment

When Boris Johnson came to office, the issue of new build numbers took centre stage in his government’s first budget. Overall, the UK government has committed to building more than 300,000 new homes every year in the UK. While this target will not be achieved until the mid-2020s, it did seem like something of a sea change compared to previous government targets. However, there is now every chance that COVID will be used as an excuse to kick these targets into the long grass. 

New build trends in England 

As England accounts for more than 80% of the UK population, the graph below should already start alarm bells ringing. To achieve a target of 300,000 new properties each year, England would need to build around 252,000 new homes. The current figure stands at around 180,000, which is well short of the required figure.

property investment

Source: UK Government 

Yes, we know that COVID has been playing havoc with building sites and new developments, but many of the projects in the pipeline today began well before the pandemic. Unfortunately, the UK government will need to pump significant money into the sector to avoid mass redundancies and companies going under. However, it is very important that new build numbers are increased and at least continue the upward trend of recent times. 

Why should we be so concerned about new build numbers? 

Demand for new homes has far outstripped supply in the UK for many years. While often ignored, and rarely discussed, it is obvious that a shortage of new build properties places pressure on existing stock. As a consequence, you tend to see a long-term trend of rising property prices. How does this benefit the UK government? 

While there has been a significant shift back towards renting properties, the UK is still to all intents and purposes a home owner society. If you are looking to curry favour with the general public, what better way than maintaining the value of their home? Indeed, if you can pretty much guarantee a long-term uptrend then even better. 

It is also in the best interests of property developers to ensure that long-term demand for new properties outstrips supply. This creates more competition for new build developments and, together with funding from various government schemes, ensures they are able to charge top dollar.

There are victims in this scenario, in the shape of first-time buyers. 

Recent government U-turn 

Unfortunately, over the last couple of weeks we have seen the UK government move tentatively towards a U-turn on their previous new build housing policy. The government recently announced that 20 cities in the UK will be asked to build an extra 100,000 new homes over the next five years. This comes at a time when city authorities are struggling to find sufficient land on which to build new properties. Indeed, there is speculation that many of the city centre authorities will instead “trade” their new allowance with neighbouring rural authorities. 

The UK government has suggested that this change in policy will allow empty offices and retail outlets to be repurposed. In theory, this seems like a fairly sensible move in light of recent retail failures. The problem seems to revolve around planning permission and affordability. Until these issues are addressed for city centre developments, the number of new builds in the UK is likely to fall further and further behind the required target. 


There were high hopes for the UK new build property sector when the Conservative government announced a target of 300,000 new builds each year. Yes, there was some disappointment that this figure would not be hit until the mid-2020s, but at least it was a target. Recent refocusing of legislation and targeting of city centre new build developments, is causing problems. If we then throw in the seemingly never-ending pandemic, this nightmare scenario could put the UK housebuilding sector back many years. 

As a consequence, growing demand for existing properties and new build developments will continue to outstrip supply. This may well be one of the reasons why the UK property market, in the shape of average property prices, continues to seemingly defy gravity. In relative terms, the number of properties in the UK is falling in relation to the population and growing demand. This creates an environment for the inevitable, an ongoing constant increase in property prices.

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.


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