How Reeves' autumn budget dealt a brutal blow to Labour's 1.5 million new homes pledge

Labour’s manifesto pledge to build 1.5 million homes while in power took another blow in Rachel Reeves’ autumn budget.

The chancellor kicked off Wednesday’s (26 November) fiscal statement hailing the government’s efforts to “overhaul the planning system to get Britain building”.

She later added Labour was “brick by brick building our economy, building roads, building homes, getting spades in the ground and cranes in the sky”.

But the Office for Budget Responsibility (OBR) revised down housebuilding forecasts by 10,000 homes compared to the 1.5 million homes across the UK it predicted would be built between 2024-25 and 2029-30 at March’s spring statement.

The 1.49 million homes the OBR is forecasting to be built over those five years also relates to the UK, whereas the government’s 1.5 million homes promise relates only to England.

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The fiscal watchdog said it expected UK housing stock additions to fall from an average of 260,000 homes a year in the early 2020s to a low of 215,000 in 2026-27.

The government’s planning reforms are expected to see a sharp rise in the number of homes being delivered towards Labour’s Downing Street tenure, up to 305,000 in 2029-30.

Labour inherited a housebuilding slump when it entered power last year but, so far, promised planning reforms have been unable to turn things around despite housing secretary Steve Reed’s pledge to “build, baby, build”.

Recent official statistics showed 208,600 additional dwellings were delivered in 2024-25, down 6% on the previous year.

The government has promised to target brownfield land, give homes built around train stations an automatic ‘yes’ and introduce mandatory housebuilding targets for local councils in a bid to drive up housebuilding.

Labour’s flagship Planning and Infrastructure Bill is now in its final stages. The government has also announced a £39 billion social and affordable housing programme over the next decade which has been warmly received but is yet to kick in.

But the struggle to ramp up building saw the government recently agree to slash affordable housing requirements from 35% to 20% for developers in London to speed up housing projects.

Noble Francis, economics director at the Construction Products Association, said the autumn budget forecasts show the government is likely to miss its 1.5 million home target “significantly”.

“The OBR’s latest economic forecasts alongside the budget say that net additional new homes in 2023-24 and 2024-25 were lower than expected, but they will be much higher than expected this year (2025/26), which is strange,” said Francis.

“It is especially strange given the slowdown in house builder demand and sales rates since spring, the sharp fall in London house building due to the Building Safety Regulator delays on high-rise starts and site viability problems, plus a hiatus in housing association housebuilding due to funding constraints until the £39bn over 10 years new funding starts next financial year.

“The OBR also forecasts 1.49 million net additional dwellings in the UK between 2024-25 and 2029-30, which is convenient for the government to say the least, but it is worth highlighting that the government’s target is only for England. So, even on the OBR’s optimistic forecasts, the government will still miss its housing targets significantly.”

What does the autumn budget mean for house prices?

House prices have been rising at a slower pace than the boom seen in previous years but the most recent Office for National Statistics (ONS) update recorded an increase by 2.6% in the year up to September 2025 to for an average UK price of £272,000.

The OBR said the average price forecasts show a rise from £260,000 in 2024 to just under £305,000 in 2030. 

That represents a 3% house price rise in 2025 with annual growth of 2.5% from 2026. The OBR said these rises are broadly in line with how much earnings are expected to grow over the same period.

But house prices remain out of reach for some. The ONS said last year the median average home costs 7.7 times the median average full-time salary in England and 5.9 times average yearly pay in Wales.

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