BLOGS

The UK housing market presents a paradox in 2026. Sales transactions remain robust, with over 1.1 million completions recorded in 2025 and average prices holding above £330,000. Yet beneath these headline figures lies a troubling disconnect: a vast pipeline of permitted homes sits dormant, and construction starts continue to lag behind the approvals that should be feeding them.

REalyse planning data shows more than 1.4 million residential units currently under construction across the UK, concentrated in London (280,559 units), the South East (246,387 units) and East of England (177,521 units). But the real story is the shadow pipeline—schemes with full planning consent that have never broken ground. Central London alone accounts for nearly 200,000 consented but unstarted units. Add the West Midlands, Greater Manchester and Kent, and the figure climbs past 400,000 in just four areas. Nationally, the stalled pipeline likely exceeds 1.7 million homes.

The approval bottleneck is loosening—but fewer schemes are coming through

Planning approval rates have remained remarkably stable. In 2023, local authorities approved 71.4% of residential applications; in 2024 and 2025, the figure held at around 71%. Average decision times have actually improved, falling from 201 days in 2023 to 111 days by 2025.

However, the volume of applications being decided has fallen sharply—from 21,800 in 2023 to just over 15,500 in 2025. This suggests developers are submitting fewer schemes in the first place, likely reflecting uncertainty about viability rather than confidence in the planning system. Early 2026 data shows an even sharper drop in approval rates to 59%, though this partial-year figure may stabilise as more decisions are recorded.

The implication is clear: the planning system is processing applications more efficiently, but the upstream pipeline of new schemes is thinning. Developers appear to be holding back rather than pushing forward.

Build costs and finance: the twin pressures on viability

Several interlinked factors explain why so many consented schemes remain on the shelf. Construction cost inflation, which accelerated sharply between 2021 and 2024, has eroded the margins that underpin many residual land valuations. Materials, labour and energy costs all spiked, and while some inflation has eased, input prices remain elevated compared to pre-pandemic norms.

At the same time, development finance has become both scarcer and more expensive. Higher base rates have pushed up the cost of senior debt, while stricter lending criteria—particularly around interest cover ratios and pre-sales requirements—have made it harder for smaller and mid-sized developers to secure funding. Many SME housebuilders, who historically delivered a significant share of UK housing, have pulled back or exited the market entirely.

Section 106 obligations and infrastructure levies add further pressure. Affordable housing contributions, highways improvements and biodiversity net gain requirements all chip away at scheme viability, particularly on brownfield sites where abnormal costs are already high.

Regional divergence: where is construction actually happening?

REalyse data reveals stark regional differences in the ratio of units under construction to those consented but stalled. London leads on both measures—280,559 units actively being built alongside nearly 200,000 waiting to start—reflecting the capital's deep, if volatile, demand fundamentals and access to institutional capital.

The South East and East of England show similar patterns, with large construction pipelines but equally large backlogs of unstarted schemes. In these regions, land values remain high enough to attract speculative applications, but marginal sites struggle to reach start-on-site when costs rise.

Outside the South, the picture is more varied. Scotland has 104,003 units under construction, with Strathclyde and Lothian together accounting for 87,000 consented but unstarted homes. The North West shows 103,377 units in construction, while Greater Manchester holds over 70,000 permitted units that have not yet started.

Wales and Northern Ireland, with smaller overall pipelines, show proportionally similar patterns: roughly 43,000 units under construction in Wales alongside 50,000+ consented elsewhere in the principality; Northern Ireland has 15,600 units being built against a smaller but still meaningful backlog.

Which developers are scaling up—and which are holding back?

Among the largest housebuilders, pipeline strategies vary considerably. Gallagher Estates leads the REalyse dataset with over 44,000 units, virtually all of which are already under construction—suggesting aggressive delivery focus. Countryside Partnerships shows a similar profile, with 31,600 of its 34,000 units actively being built.

By contrast, some major names have substantial uncommitted pipelines. Bovis holds 28,600 units in total, but more than half—15,200 units—remain granted but not started. Mount Anvil shows 8,000 units overall, with 5,300 yet to commence. Most striking is Crown Estate's residential pipeline: 15,000 consented units with none currently in construction.

These figures reflect different strategic postures. Developers with strong balance sheets and access to patient capital are pushing forward; those reliant on scheme-by-scheme finance or facing margin pressure are holding consented land and waiting for conditions to improve.

The path to restarting at scale

Breaking the logjam will require action on multiple fronts. Stabilising construction costs—or at least improving their predictability—would help developers underwrite schemes with greater confidence. Targeted interventions to support SME housebuilders, who lack the resilience of PLC builders, could help restore a segment of the market that has shrunk dramatically.

On finance, expanding institutional investment in residential development—particularly build-to-rent and forward-funding models—could bypass some of the constraints affecting traditional debt-funded speculation. Planning reforms that reduce delay and provide greater certainty on infrastructure contributions would also help, though the political will for such changes remains uncertain.

For investors and lenders, the current environment creates both risk and opportunity. Schemes in strong locations with committed developers and secured finance are likely to proceed; marginal schemes in weaker markets may never start. Distinguishing between the two requires granular, location-specific analysis of comparable values, rental yields, local demand drivers and planning pipeline.

Outlook: cautious optimism, but no quick fix

The UK housing market in 2026 is not broken—sales volumes remain healthy, and over 1.4 million homes are actively under construction. But the gap between consented supply and actual delivery represents a structural challenge that will take years, not months, to resolve.

Regions with strong demand fundamentals and institutional capital flows—London, the South East, key regional cities—are best placed to maintain momentum. Developers with diversified land banks, forward-funded schemes and strong balance sheets will continue to build. But the broader restart of UK housebuilding at scale depends on a more favourable cost environment, improved access to finance for smaller players, and sustained confidence that completed homes will sell or let at viable levels.

For those tracking the market, tools like REalyse provide the granular planning, transaction and rental data needed to identify which schemes are progressing, which are stalling, and where the next wave of construction activity is likely to emerge.