Interest in mass-developed new homes is sharply declining, with first-time buyers increasingly turning away from expensive developer-led housing.
Meanwhile, demand for self-build and custom-build homes is rising steadily as more people seek control and affordability.
Yet despite this growing appetite, planning permissions for self-build plots are falling, limiting the UK’s ability to meet its housing needs through this popular route.
Planning permissions collapse as targets drift further away
The number of new homes granted planning permission in England in Q1 2025 has fallen to 39,170, the lowest quarterly figure since 2012, according to the Home Builders Federation’s (HBF) latest Housing Pipeline report.
This is a 55% drop on the previous quarter and a 32% drop year-on-year, placing severe pressure on the government’s pledge to deliver 1.5 million new homes by 2030.
HBF Chief Executive Neil Jefferson warned: “The latest planning figures are disastrous for an industry and a government looking to increase housing supply over the coming years.”
He continued: “Planning permissions and house building levels will not increase unless ministers work with industry and tackle the issues preventing companies from pressing the accelerator and investing in the sites, skills and supply chains needed to build the homes the country needs.”
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New builds losing favour with first-time buyers
Meanwhile, new-build homes, the primary source of homes in the UK, are being shunned by first-time buyers.
A 2025 report from Compare My Move shows that the proportion of first-time buyers purchasing new builds has dropped from 10.03% in 2022 to just 7.72% in 2025.
Founder Dave Sayce said: “The average cost of a new-build home in England as of October last year was £420,000, rising 18% from the previous year. With the reduction of the Stamp Duty relief for first-time buyers, the tax they will have to pay on an average new-build home will be £6,000. Even with a 5% deposit, first-time buyers will have to pay £27,000 up front on average.”
The only part of the UK where first-time buyer interest in new builds is growing in Scotland, which saw a 2.43% increase in 2025.
Demand for self and custom-build homes is surging
While traditional supply stalls, more people are exploring the possibility of designing and building their own homes.
According to the National Custom and Self Build Association (NaCSBA), more than 55,000 people are registered with local councils in England under the Right to Build legislation, which gives individuals the right to request land to build their own homes.
Mario Wolf, founding director of the Right to Build Task Force, told Parliament: “We have massive untapped demand for self-build and custom housebuilding in this country.”
Despite this demand, the UK builds just 13,000–16,000 self or custom-build homes per year, compared to more than 50% of new homes in countries like Austria or Germany being built this way.
Planning permissions for self-builds falling behind demand in 2025
In 2025, interest in self-build homes remains strong, with local authority registers showing continued growth.
However, planning permissions for serviced plots are declining – dropping 18% in the year ending March 2025 to just over 5,000 plots.
The NaCSBA reports similar trends, with a 23% decrease in permissions over recent years.
Experts warn this gap between demand and permissions risks stalling the delivery of much-needed new homes unless urgent planning reforms are implemented.
Without urgent reforms to planning policies and support for self-builders, thousands of potential new homes may never materialise.
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