Following Chancellor Rachel Reeves's Spring Statement, we’re looking at how it may impact the property market and how the industry is reacting—from housebuilders to homebuyers.
Planning Reform Supports Housebuilding Targets
Let’s start with the positives. When it comes to housing and house building targets, the OBR believes that reforms to the UK’s planning system will result in housebuilding being at its highest level in over 40 years.
The Chancellor highlighted that these reforms could deliver an extra 170,000 homes by 2029/30, boosting the number of homes being built by 30%.
If these forecasts are correct, it’ll bring the UK much closer to the Government’s original target of building 1.5 million new homes that was laid out in the Autumn budget.
The other result of these planning reforms? The OBR believe that the country's real GDP could increase by 0.2% by 2029/30 - translating to around £6.8 billion - the largest positive growth effect the OBR have ever forecasted for a zero-cost policy.
Uncertainty Leading to Lower Short-Term Growth
Unfortunately, not all of the OBR forecasts were as positive. In terms of economic growth, the watchdog suggested that growth in 2025 would be around 1% - down from the original 2% forecast.
That said, while short-term growth is expected to be stagnant, the gross domestic product (GDP) forecasts over the next four years have increased. GDP is expected to grow by 1.9% in 2026, 1,8% in 2027, 1.7% in 2028 and 1.8% in 2029.
Likewise, following inflation falling to 2.8% in February, the OBR believes inflation will fall to 2.1% by the end of 2026 and finally settle at the 2% target set out by the Bank of England from 2027.
How Has the Industry Reacted?
So what can we expect from the rest of the year? In the lead up to the Autumn Budget, the Government is expected to start consulting on new policies as part of the ‘Plan for Change’ project to deliver 1.5 million new homes, as well as publishing a Long Term Housing Strategy based around investment in social and affordable housing.
In terms of industry reaction, Richard Donnell, executive director at Zoopla, believes that the Government needs to focus on certain priorities:
“The housing market needs a strong and growing economy to support housing supply. It’s promising to see the Government focusing on longer-term impact by boosting funding for new homes and avoiding short-term measures like stamp duty holidays that don’t really help with the fundamental challenges in the housing market.
“The top priority should be an easing of mortgage regulations, which will support first-time buyers, an important buyer group for homebuilders and the broader market.
“This would also help the rental sector, where there are still 12 people chasing every home for rent, with those on low incomes bearing the brunt. Increased funding for social housing is essential in the upcoming Spending Review to help support housing delivery and boost the stock of social rented homes, which has been static for 30 years.”
