Housing measures unveiled as geopolitical uncertainty deepens demand challenges

A package of emergency measures designed to accelerate housing delivery in London has been published to help unblock stalled sites and boost construction.

New measures include a fast-track planning route for sites delivering at least 20% affordable housing and temporary relief for developers from the Community Infrastructure Levy on eligible schemes⁽¹⁾.

Reacting to the package, BCIS chief economist, Dr David Crosthwaite, said fast-tracked planning is important but cautioned that approval holdups are only one of several challenges faced by developers.

‘The government is behind on its housebuilding targets and planning delays remain one of the biggest barriers to delivery. It’s encouraging to see action on a lever it can directly control. However, major constraints remain beyond its reach. Weak buyer demand, particularly in London, is a critical issue. With the for-sale market subdued, there is little incentive to accelerate building,’ he added.

‘In their letter to local authority leaders in the capital, the Mayor and the Housing Secretary acknowledged the “perfect storm” facing delivery, including dampened demand. However, the new emergency measures are unlikely to shift demand in the short term.

‘That will depend on wider economic recovery and improvements in the cost of living, both of which now face renewed uncertainty amid rising energy price risks linked to tensions in the Middle East.’

Updates from housebuilders indicate that, while the Middle East conflict is yet to have a material impact on trading, it has reintroduced volatility into the mortgage market in recent weeks, increasing the risk of weaker consumer demand and renewed inflationary cost pressures⁽²⁾.

The latest BCIS forecasts indicate the private housing sector will not return to growth until next year.

The forecast for total new work output over the next five years has also been downgraded since the previous forecast and is now expected to reach 11%.

Research published in January 2026 suggests private housebuilding in London has declined by 84% since 2015.

The latest construction output data from the Office for National Statistics further showed a 10.7% year-on-year decline in new private housebuilding in the UK in January, alongside a 3.3% fall in public housebuilding.

‘London is a vital cornerstone of the government’s housebuilding ambitions. Yet the shortfall between the housing that’s being built and what’s required speaks to the combination of high costs for housebuilders and the higher interest rates that have been undermining both supply and demand,’ Dr Crosthwaite said.

‘Given the lack of incentive to build in light of weaker demand, further significant and immediate support for first-time buyers feels like the best place for financial and policy investment right now.’

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^{(1) GOV.UK – Emergency action to kickstart London housebuilding – here}

^{(2) London Stock Exchange – Interim Results Announcement – here}