The race is on for the government to deliver its promise of building 1.5 million homes over the next five years, and while the jury is still out on whether they will achieve that number or substantially less, recent figures from the National House Building Council (NHBC) suggest a positive outlook for new homes in 2025.
Data from the NHBC shows that new home registrations surged by more than a third in Q1 2025 compared to Q1 2024. This rise signals a potentially substantial increase in the availability of new homes in the near future.
The NHBC, which dominates over 70% of the UK warranty market, tracks new home registrations before construction starts, providing an early indicator of the housing development pipeline.
The data revealed 29,356 new home registrations across the UK in the first quarter of 2025, which represents a 36% increase compared to the first quarter of 2024 and a 17% rise from the final quarter of last year.
The private sector saw significant growth, with 20,653 new homes registered in Q1 2025, a 62% jump from Q1 2024. In contrast, the rental and affordable sector experienced a slight decline, with 8,703 homes registered, down 2% from the same period in 2024.
Among the homes registered in Q1 2025, detached homes totalled 9,821, up 63% from the previous year. Bungalows numbered 416, reflecting a 54% annual increase, while semi-detached homes reached 9,955, a 44% rise from Q1 2024.
Terraced homes, at 4,562, saw a 23% year-on-year increase. Apartment registrations, however, fell to 4,602, a 3% decrease from Q1 2024. Additionally, new build completions totalled 26,120 in Q1 2025, down 1% compared to Q1 2024.
Steve Wood, CEO at the NHBC, said that these figures “indicate growing confidence in the market” and that the “easing of inflation, lower mortgage rates and a greater availability of lower deposit mortgages, all point to improving prospects in UK house building”.
But not all areas are equal, and London saw a yearly decline in new build registrations in Q1 2025. The NHBC attributed this drop to the impact of new building safety regulations for high-rise structures and reduced demand from housing associations, which are prioritizing capital budgets for existing properties.
All other areas of the UK were up on last year, by at least 18%, which was seen in the South West. The areas that showed the biggest increases were Wales, with a 116% increase against 2024, East Midlands, with a 102% increase, West Midlands 51% and the North East showing a 49% uplift.
For the government to achieve its target, it needs to build 300,000-370,000 net dwellings annually, and while the Q1 surge is promising, the 1% drop in completions and regional disparities such as London’s decline, suggest challenges.
The devil is in the detail, and to hit the sweet spot, the government needs to make sure that the right homes are being built in the right places, for the right reasons. Building homes in areas of high demand, such as commuter belts, is essential, but it is equally important to avoid over-concentration in already saturated regions like the South East.
A balanced approach would distribute development to underserved regions, such as the North and Midlands, where affordability and land availability are more favorable.
Site concentration poses another challenge, the data shows a decline in new build completions, suggesting that developers are cautious due to economic uncertainty and rising costs. To counter this, policymakers and developers must diversify site selection, prioritizing brownfield and greybelt sites and urban regeneration to reduce pressure on greenfield land.
Lender exposure is another critical factor influencing the new build market. Lenders need assurance that new builds are in locations with stable demand and minimal environmental risk. Over-concentration in flood-prone or coastal areas, for instance, could deter investment due to rising insurance costs and climatic uncertainties.
Of course, we have data, systems and people with a lot of experience and expertise who can protect many in the value chain from the risks new build can present. But marshalling all the moving parts is notoriously difficult for policy makers. The law of unintended consequences roams large in housing. Will new build meant for first-time buyers be snapped up by landlords seeking better EPC ratings in their portfolios? Will the push of immigrants from hotels into the PRS further exacerbate demand for new housing for rent?
More housing is coming and that is to be applauded. The future of the UK new build market is filled with potential, and if we can get it right, with thoughtful and strategic development, this new generation of new homes could be the foundation of a thriving UK.
