The Chancellor’s recent announcement of a £39 billion investment into affordable housing is a welcome boost for a development market that has faced persistent headwinds in recent years.

Since the introduction of the Building Safety Act in April 2022, many Registered Providers (RPs) have taken a step back from new development, redirecting their focus toward rectifying legacy building safety issues within their existing portfolios. At the same time, the wider development sector has struggled under the weight of mounting regulatory and environmental requirements, all within the context of a low-growth, post-Brexit economy, rising build costs, and increasingly restrictive mortgage lending conditions.

In this climate, the injection of government funding has the potential to act as a much-needed catalyst. If accessed effectively, this funding could help RPs re-engage with stalled development projects and inject momentum into a sluggish market, potentially easing cost inflation as activity resumes.

However, while the headline figure of £39 billion is significant, it's not a silver bullet. Meeting the Government’s target of building 1.5 million new homes over the next five years will require far more than increased funding to RPs alone. The rate of new housing starts remains tethered to the market’s absorption capacity, which in England is largely dependent on private buyers.

In areas like London and the South East, where average house prices are up to 14 times average incomes, affordability remains the biggest barrier. Strict lending rules and the requirement for large deposits have effectively locked an entire generation of young professionals out of the housing market.

Until mortgage restrictions are eased and access to finance is improved for lower- and middle-income buyers, supply will continue to lag behind demand. The Government must broaden its focus beyond subsidised rental homes and begin addressing the needs of aspirational homeowners if it is serious about solving England’s housing crisis.