The East needs more homes. Where are we prepared to build them?

Eastern Powerhouse

12 minutes ago

5 min read

England is heading for another missed housing target. The row over Forest City exposes a question the East of England can no longer put off: where will the people who keep its economy growing be able to live?

In 2025, the median home in England cost 7.6 times the median annual earnings of a full-time employee. The ratio has eased since its 2021 peak, but much of London, the South East and the East of England remains especially expensive relative to local pay. Around Cambridge and in parts of Hertfordshire and Essex, the consequences reach well beyond the property market. When people struggle to live within reach of work, employers recruit from a smaller pool, households face longer commutes and young people find it harder to stay in the places where they grew up.[1]

How the shortage built up

Successive governments have failed to sustain housebuilding at the scale Britain needs. For a generation after the Second World War, councils built alongside private developers and the state assembled land and invested in new towns. The UK completed more than 425,000 homes in 1968. From the 1980s, council building declined sharply and Right to Buy transferred homes out of the social rented sector faster than they were replaced. Housing associations and private builders never filled the gap left by council building. The 2008 financial crisis brought another sharp fall in output.[2]

Planning has also shaped where homes get built. Case-by-case decisions make it difficult to assemble land, plan infrastructure and expand settlements in places where jobs are growing. Centre for Cities estimates that the UK would have had 4.3 million more homes by 2015 if its housing stock had grown at the average rate of comparable Western European countries from 1955. That estimate puts the scale of the problem in perspective.[3]

In addition, the YIMBY Alliance have identified a weak relationship between where demand for housing is strongest and where houses get built, with the planning system pushing development away from where it is needed. This exacerbates the ‘scarcity premium’ whereby the excess cost of building houses in high demand areas is driven purely by the artificial scarcity of permitted land and restrictive planning rules.[4]

Why the Government is likely to miss its target

The Government has promised 1.5 million net additional homes in England during this Parliament. Its planning reforms restored mandatory local housing targets and opened a route to development on some lower-quality green belt land. Yet the Ministry of Housing, Communities and Local Government estimates that England added around 437,900 homes from the start of Parliament in July 2024 to 20 September 2026. On a five-year timetable, delivering the remaining 1.06 million would require roughly 380,000 net additions a year. England recorded 208,600 in 2024/25, and the provisional estimate for 2025/26 is 196,900.[5]

The Office for Budget Responsibility’s October forecast offers little reason to expect that acceleration. It still expects planning reform to boost supply but now forecasts about 220,000 net additions across the UK in each of 2026/27 and 2027/28, rising to 260,000 in 2030/31. That is around 190,000 fewer homes over its forecast period than it expected in March. Weak planning permissions, higher borrowing costs and pressure on development viability are holding back delivery.[6]

What the slowdown costs construction

A shortage of homes can coexist with a shortage of buyers able to finance a purchase. When mortgage costs stretch household budgets, builders have fewer buyers at the prices they need to cover land, labour and materials. Sites are phased more slowly, orders fall and smaller contractors have less work to bid for.

Private new housing output in Great Britain fell 4.7 per cent in the third quarter of 2026 compared with the previous quarter.[7] In September, brick deliveries were 15.4 per cent below a year earlier, while the overall construction materials price index was 7.2 per cent higher.[8] Construction recorded 3,873 company insolvencies in England and Wales in the year to September, the highest number of any industry and around 17 per cent of all cases.[9]

A stop-start pipeline makes firms less willing to invest in plant, take on apprentices or retain skilled tradespeople. That matters when the Construction Industry Training Board estimates the UK will need an average of 41,200 extra workers a year from 2026 to 2030 to meet expected demand and replace people leaving the industry.[10] The October Budget’s extra £1.5 billion for social and affordable housing, prioritising social rent, gives councils and housing associations a chance to sustain work when private sales are weak.[11]

Forest City and the politics of saying no

The East has some of England’s highest demand and least affordable housing markets. It also has pockets of strong resistance to development. In 2024, Stack Data Strategy polling on development within half a mile of respondents’ homes put four Essex districts - Uttlesford, Maldon, Brentwood and Rochford - among the ten least supportive of development overall.[12] These are also areas with the largest demand and highest buyer pressure for new homes. A separate 2026 survey asking about new homes within three miles found that support in the East, at 36 per cent, exceeded opposition, at 30 per cent.[13] The type and proximity of development shapes the response.

Forest City has brought that tension into the open. Promoters Shiv Malik and Joe Reeve propose up to 400,000 homes over 30 years on around 45,000 acres between Newmarket and Haverhill, with a new railway and reservoir.[14] West Suffolk MP Nick Timothy has led the campaign against it and raised the proposal in Parliament.[15] Councils on both sides of the county border have challenged its scale, the loss of productive farmland, the pressure on water and wastewater systems and the lack of clarity over who would pay for major infrastructure. Ministers confirmed in June that the proposal had failed the deliverability test for the Government’s New Towns programme.

A proposal of this size deserves scrutiny. It also exposes a familiar imbalance in the planning debate. People who stand to lose farmland, views or quiet roads can organise around a specific proposal. The people who would live in the homes, including local young adults and workers currently priced out, are harder to organise and often absent from the room. The test for anyone opposing a scheme in a high-demand area is whether they can say where the homes should go, how many can realistically be built there and when people can move in.

Where the East can build

Greater Cambridge’s emerging local plan identifies a need for more than 50,000 homes between 2024 and 2045.[16] Around 37,000 are already provided for through existing permissions and adopted allocations. Getting those homes built is an immediate priority. That means resolving water and wastewater constraints, funding transport connections and securing a mix of homes that includes social rent. The proposed new town at Tempsford, where the Government envisages up to 40,000 homes around an East West Rail station, is another opportunity to plan homes and transport together.[17]

The East needs a regional plan that connects the places creating jobs with the places that can accommodate more homes. That means building around stations and existing centres, expanding towns where services can grow with them, and considering new settlements where the infrastructure and funding stack up. Councils, mayors, government and utilities should set out which sites can come forward first, what infrastructure each depends on and who will pay for it. The most important question raised by Forest City will still be there after the campaign ends: where will the East make room for the people its economy depends on?