Building new homes not financially viable across half of England
Zoopla report highlights that the 1.5 million new homes target is only currently achievable across just half the country - it’s much harder to build homes in affordable areas
New analysis from Zoopla reveals the reality of ‘build baby build’ and what the government needs to do to support increased housing delivery
Building homes is not financially viable across 48 per cent of England and considered challenging across almost two-thirds of England (64 per cent)
The viability challenge is down to the fact that the overall cost of delivering a new home (up 17 per cent) has grown faster than sales prices (up one per cent) since 2022
Two-thirds (64 per cent) of southern England have average sales prices at levels that can support the cost of delivering new homes, compared to just 13 per cent in the Midlands and 10 per cent in the North
In addition the analysis highlights a disconnect between viability to build and affordability for home buyers - this shows that where it is viable to build homes it is unaffordable for people to buy and where it is affordable to buy it’s less viable for builders to build homes.
LONDON: Building new homes is not currently financially viable across half (48 per cent) of England and ‘challenging’ across almost two-thirds (64 per cent) of the country, according to a new report(1) from Zoopla, one of the UK’s leading property websites.
With the Government set on its ambition to build 1.5m homes over five years, Zoopla’s analysis highlights it is far from easy to build in the areas that need new homes the most at pricing levels that support more home building. The delivery of new homes has stalled, with the number of homes granted planning permission down by 23 percent since 2022(2) and seven per cent lower over the last year, casting serious doubt over the housing target.
Commenting on the report, Richard Donnell, Executive Director at Zoopla says: “While the Government says it wants to ‘build baby build’, our analysis shows that this can only be currently achieved across half the country, in areas that are typically more expensive for consumers to buy. It is much harder for builders to build homes where it’s affordable for home buyers to buy.”
Table 1: Building homes viable in just 36 per cent of England
Cost to deliver homes has risen significantly faster than sales values
Analysis of reports and accounts from large listed housebuilders reveals that the cost of building homes increased by an average of 17 per cent between 2022 and 2024, while average selling prices rose by just one per cent. Smaller-sized home builders, who account for 30 per cent of new build developments in England, are likely to have experienced higher levels of cost inflation than larger, listed builders.
The cost of building new home developments has risen quickly in recent years as a result of higher borrowing costs, greater build costs, and increasing costs resulting from policy changes, as well as additional future costs from the Building Safety Levy and the proposed Future Homes Standard, with more in the pipeline.
Table 2: Build and sales costs changes for major listed builders 2022-2024
Demand for new homes has weakened since the ending of the Help to Buy equity loan scheme in Autumn 2022 and the recent increase in mortgage rates. It has also been weakening within the affordable housing market. Large developers rely on housing associations to buy up to a quarter of their new builds through Section 106 agreements(3). However, demand from these associations has dropped due to well-documented issues like building safety costs and higher borrowing rates.
North-South divide widens
The analysis also reveals a clear north-south divide in the viability of home building. Higher sales values of new homes in southern England are supportive of development viability, compared to the Midlands and northern England where sales values are lower relative to the costs of delivering new homes.
Table 3: Viability of building homes follows a north-south divide
Two-thirds (64 per cent) of southern England have average sales prices at a level that can support the cost of delivering new homes, compared to 13 per cent in the Midlands and 10 per cent in Northern regions. It is important to acknowledge that builders are currently developing homes in areas where viability is poor for new schemes on land that was acquired in the past so these extra costs are typically being absorbed by lower margins. Making new land acquisition work is the growing challenge that hits future delivery, as 37 per cent of the housing targets are located in areas rated as unviable for development.
However, while the viability to develop new homes is better in southern England, these areas have some of the most unaffordable markets for home buyers. This limits the pool of potential demand, creating sales risk and slow sales rates for new housing schemes.
The report recommends four key actions to address the problem:
Planning Reform: Continue to simplify and unlock the planning process to make it easier to develop land
Regulatory Review: Re-evaluate new policy burdens that increase development costs
Targeted Funding: Deploy new funding for affordable housing quickly and strategically to enable housing associations to acquire new homes
Demand Support: Consider a return of targeted support for first-time buyers to boost demand without inflating prices across the board
Richard Donnell continues: “The government can't control the price of raw materials like bricks or concrete, but it can influence the rising costs of new regulations. While recent planning reforms and affordable housing funding are positive steps, they are not a complete solution to boosting new home building. Further reforms are needed to boost capacity and speed at the local planning level and new funding should be focused on immediate, not long-term, delivery. Direct support for homebuyers could help, but if deployed, requires careful targeting.
Builders also need to ensure they are marketing homes as efficiently as possible. Affordability pressures are making people look further for their next home, especially in the new homes market. Zoopla has boosted the visibility of new homes within property search and is helping builders target would be buyers from across wider catchment areas."
“Building more homes is vital in helping to ease the pressures facing those in the housing market, but the viability of building is at risk from further cost increases and we can't rely on higher house prices to fix it.”
-ENDS-
Notes to editors
The findings are based on a localised model that compares sales values for new homes to the ‘all in cost’ of delivering a new home. Where sales values are higher than delivery costs, it is viable to develop. Conversely, where the overall cost of delivery is greater than sales values then it is not viable to build new homes. The analysis focuses on the viability of starter and family home housing led developments, most new homes are delivered in the form of houses. Apartment-led developments in city centres is more complex and excluded from the analysis
MHCLG, Planning applications in England: April to June 2025 - statistical release - Table 3 - Glenigan planning permission data: snapshot as at 20 August 2025
Published 18 September 2025
Housing market intelligence report 2024 - Article - A changing consumer landscape points to new ways of thinking, October 2024
Viability status is calculated at a postcode district level and aggregated to local authority level. The localised data drives the status rather than the local authority level average values. Sales values are assumed at the 75th percentile on a £ per sq ft basis.
About Zoopla
Zoopla is a leading UK property website and trusted consumer brand, empowering movers to make better property decisions with over nine million monthly users generating over one billion annual property searches. Zoopla is more than a property portal. Over 4.8m million homeowners are subscribers, tracking their property values and providing a pipeline of movers for Zoopla’s customers. The business is investing in leveraging its scale and reach to build new, AI-driven experiences that engage movers and unlock value and a strong ROI for customers.