The housing supply forecast for the United Kingdom has been cut by 190,000 net additional homes compared with the previous March projection. The Office for Budget Responsibility (OBR) set out the downgrade in its Economic and fiscal outlook, published alongside the Budget on 28 October 2026.
The independent fiscal watchdog expects net additions to the housing stock to fall from around 230,000 in 2025-26 to 220,000 in both 2026-27 and 2027-28, before gradually recovering to 260,000 by 2030-31. Its previous forecast envisaged a much stronger recovery, so this is a substantial change in expectations rather than a rounding adjustment.
This matters to planners, landowners, housebuilders and councils because the housing supply forecast reflects more than the number of applications granted permission. The OBR still expects planning reform to boost construction, but warns that borrowing costs, weak effective demand and several other regulatory pressures are delaying the delivery of new homes.
Why the housing supply forecast has changed
The most striking figure is the reduction of 190,000 net additions across the forecast period against March 2026. The OBR’s precise wording is 190,000 fewer cumulative net additions over the forecast period
. That is a forecast comparison, not a claim that 190,000 existing homes have disappeared or that 190,000 permissions have been refused. It is also not an official count of homes already completed.
Net additions are a broader measure than new-build completions. They include homes gained by conversions and changes of use, as well as new construction, and subtract homes lost through demolition and other changes. The OBR combines information from the four nations when forecasting the UK stock. That matters when comparing the national numbers with an individual council’s annual delivery.
For a development business, a revised national projection does not automatically invalidate an individual scheme’s viability appraisal. It is, however, a warning about the market into which new homes will be sold and the period over which a pipeline may actually complete. A consented site can remain unbuilt if the economics do not work.
Planning permissions are an early warning
The OBR places particular weight on the weaker path of residential planning permissions. Its Chart 2.19 compares completions implied by the permissions pipeline with the previous housing trajectory. It applies historical delays between permission and construction, rather than assuming every permission becomes a finished home immediately.
This is an important distinction for local authorities. The number of planning applications received, decisions issued, outline permissions granted and homes actually occupied are different measures. None can safely stand in for the others. Even an increase in approvals today would normally take time to show up in completions, particularly for larger phased developments.
The housing supply forecast also needs to be read alongside current evidence about demand. Developers can have implementable permissions yet hold back starts where expected selling prices, finance terms or construction costs make the next phase unattractive. That is a delivery problem as well as a planning problem.
Planning reform is still expected to help
The OBR has not withdrawn its earlier assessment that the changes to England’s National Planning Policy Framework announced in 2024 should increase housebuilding. It expressly retains the positive impact assumed in its March 2025 forecast. Readers can see how that policy framework operates in Planning Geek’s NPPF guide, while remembering that the OBR is modelling a UK-wide outcome.
What has changed is the expected timing and scale of delivery from the broader market. Higher interest rates since late 2022, affordability pressures and weaker buyer confidence have reduced the commercial viability of schemes, according to the OBR. A favourable policy balance can assist an application, but it cannot itself make borrowing cheaper or create sufficient effective demand.
I would resist the easy headline that planning reforms have failed. The housing supply forecast has been downgraded, but the OBR does not attribute the entire cut to planning policy. Equally, claiming that the reforms will deliver a housing boom immediately is not supported by the leading indicators the watchdog has examined.
Building safety, ecology and other costs
The report draws attention to changes outside the planning system that have accumulated since 2019. It names the Building Safety Regulator regime and the Building Safety Levy, environmental requirements including biodiversity net gain and nutrient mitigation, and fiscal measures such as the residential property developer tax and corporation tax. The OBR considers their combined effect to have weighed more heavily on development than previously assumed.
Those requirements serve different public purposes and should not be treated as interchangeable costs. Building safety is about protecting residents, while biodiversity requirements address environmental harm. The relevant question for a scheme is whether the cumulative cost, delay and uncertainty have been properly allowed for. Planning Geek has separate guidance on the Building Safety Levy and biodiversity net gain.
The Budget’s promise to relax some biodiversity requirements for smaller brownfield housing is not proof that the forecast has already improved. Proposed exemptions need their own legal and commencement checks. Nor should an industry-wide observation be read as evidence that one specific environmental or safety protection is unnecessary.
The first-time buyer scheme is not a supply fix
The OBR expects the Government’s Your First Home equity loan scheme to have only a marginal effect on overall housing supply because of its limited size. It could stimulate some purchases, but a demand-side incentive is not the same as an immediate increase in completions. The scheme’s detailed eligibility and delivery rules matter more to an individual buyer than a national headline alone.
The report also expects house price growth of roughly 2 per cent in 2026 and 2.5 per cent in 2027, before averaging around 2.75 per cent from 2028. Those are conditional projections, not guaranteed future prices. Mortgage costs and household incomes remain important risks to both buyers and developers.
UK projections and England’s target are different
There is a potentially misleading comparison to avoid. The OBR’s figures describe net additions to the United Kingdom’s housing stock, whereas the Government’s stated 1.5 million homes ambition for the parliamentary period concerns England. They cover different territories and time horizons. It would be wrong to subtract one total directly from the other and present the difference as an official target shortfall.
For individual English planning decisions, the current development plan, national policy and evidence of local housing need remain the legal starting points. The OBR’s national economic forecast does not amend a five-year housing land supply calculation or determine an appeal. Planning Geek’s five-year housing land supply guide explains that separate planning test.
What the housing supply forecast means in practice
Developers should check whether sales rates, interest assumptions, construction budgets and infrastructure costs still support their delivery programmes. Where large schemes depend on several permissions or phased obligations, timing deserves particular attention. Councils should distinguish a weak housing market from a slow planning service rather than use the same explanation for every stalled site.
For landowners, a site allocation or outline consent remains valuable, but price expectations may need to reflect how long a promoter will take to build. For policymakers, the housing supply forecast raises a harder question than whether a new policy looks favourable on paper: what additional dwellings are likely to be delivered in the real economy, and when?
The central evidence is in paragraphs 1.15 and 2.60 to 2.64 of the OBR’s October 2026 Economic and fiscal outlook. Planning Geek’s Budget roundup covers the separate measures announced by ministers. This housing supply forecast is the independent watchdog’s assessment, not a new planning law or a change to an individual permission.
0 Comments