Labour’s housing minister has admitted that the government’s plan to build 1.5 million homes will gradually slow house price growth across the country. Matthew Pennycook told the House of Commons that housing gains would level off as a result of the building spree.
Mr. Pennycook explained that increasing housing supply would impact property prices, estimating that a 1% rise in housing supply would decrease prices by 2%. However, he emphasized that prices would not fall sharply but would ease gradually.
“If you flood a local housing market with homes of any tenure, you will have a positive impact on housing affordability,” Pennycook stated.
Housing Plans to Level Off Property Gains
Pennycook outlined that the best outcome expected from the housing plans would be a sustained levelling-off of house price growth, followed by a gradual easing over time. Despite optimism, figures showed that house prices recently surpassed £300,000 for the first time, increasing affordability concerns for first-time buyers. Prices have increased by £60,000 in the past six years, with Halifax predicting further rises.
Challenges in Meeting Housebuilding Targets
While Labour’s housing ambitions aim to meet the 1.5 million target, official figures show a decline in the number of homes being built. In 2025, housing starts dropped by 9%, with just 33,020 new homes built in the third quarter. In London, the construction of new homes has decreased dramatically, with an 84% drop over the past decade.
Despite these challenges, Pennycook remains hopeful. He insists that Labour can meet its housing target through planning reforms and efforts to encourage collaboration with small-to-medium developers.
