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Evening Standard
Evening Standard
Politics
Nicholas Cecil

Minister defends 88,000 new homes target for London a year as housebuilding slows in blow to Government

A housing minister has defended the target of 88,000 new homes a year for London.

The new Labour government has made delivering 1.5 million new homes in five years a key priority, vowing to drive through reforms to the planning system.

But the plan was dwelt an early blow with a new survey showing housebuilding in December declining at the fastest rate since June, which may be partly due to the weather.

A shortage of homes in London has driven up property prices for years, as well as the cost of renting.

Housing minister Baroness Taylor of Stevenage was challenged in the Lords over why London’s annual target had been cut by some 10,000 to around 88,000.

Shadow housing minister Baroness Scott of Bybrook told the Upper Chamber: “Affordable homes should be built where they are most needed, meaning near jobs and existing infrastructure such as public transport networks, schools and doctors.

“With that in mind, can the Minister tell us why London’s mandatory housing target has decreased while some rural constituencies have seen increases in hundreds of per cent?”

She added: “Will the Government reconsider their targets to build more affordable homes in London, where there is the highest need for them?”

But Baroness Taylor responded: “The new methodology... strikes a balance between meeting the scale of need right across the country and focusing additional growth on places facing the biggest affordability pressures by more than doubling the affordability multiplier, which is in the method.

“It produces a figure for London of nearly 88,000, more than double recent delivery, and London has the biggest proposed percentage increase against existing delivery of any region in the country by a significant margin.”

Meanwhile, a new survey showed growth across the UK’s construction industry has slowed to the lowest rate for six months, as stagnant demand for housebuilding continues to drag on overall production.

The latest S&P Global construction purchasing managers’ index (PMI) scored 53.3 in December, down from 55.2 in November.

Any reading above the 50 threshold indicates that activity in the industry is increasing while anything below means it is shrinking.

The latest score is the lowest since June, and came in below the 54.4 reading that analysts had been expecting.

Commercial work, like offices, shops and warehouses, continued to be the fastest-growing area of the construction sector in December, followed by civil engineering activity.

Residential work remained the only subsector to register an overall decline in output in December, with housebuilding activity declining at the fastest rate since June.

Housebuilders have continued to grapple with weaker demand for new homes.

This has been driven by more fragile consumer confidence and borrowing costs remaining elevated, despite recent cuts to the UK interest rate.

Tim Moore, economics director at S&P Global Market Intelligence, said: “Concerns about the demand outlook weighed on construction sector growth expectations for 2025.

“Although confidence recovered after a post-Budget slump during November, it was still much weaker than in the first half of 2024.

“Many firms reported worries about cutbacks to capital spending and gloomy projections for the UK economy.”

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