The number of new homes given planning approval in England in the first quarter of 2025 has fallen to a 13-year low, according to a new report from the Home Builders Federation (HBF).

At 39,170, it was the lowest number of quarterly approvals since 2012 and the third lowest since the data set was started in 2006 - a 55% drop on the previous quarter and 32% drop on Q1 2024.

The figures are included in the latest Housing Pipeline report, based on data from Glenigan.

The HBF says the report starkly illustrates the urgent need for government to address problems in the housing market and the ongoing barriers to housing supply if they are to reach the 1.5m homes target.

The rolling annual number of units approved in the year to Q1 2025 was just 225,067, a 7% drop on the previous 12 month period and the lowest 12-monthly outturn recorded since 2013. The figure is just 61% of the 370,000 number the government has cited as an ambition to achieve, through cumulative local authority housing targets across the country.

The number of projects, or sites approved in Q1 2025 was 2,010, an 18% drop on the previous quarter, the worst quarter since reporting began some 20 years ago, representing less investment in new sites than during the global financial crisis and the Covid lockdowns.

The rolling annual number of projects approved in the year to Q1 2025 was 9,275, itself a new record low and is the twelfth quarter in a row that the annual rolling number has been the lowest since the report began recording.

The HBF estimates around 200,000 new homes are being delivered annually, already 100,000 behind the run rate needed to hit the 1.5m target.

Neil Jefferson, chief executive at the HBF, said: “The latest planning figures are disastrous for an industry and a government looking to increase housing supply over the coming years.

“With current supply flatlining and permissions for homes to be built over the next few years plummeting, unless urgent interventions are made, there seems little chance of us building the homes we know are desperately needed.

“Whilst the government’s ambition and the swift action on planning were very welcome, increasing housing delivery requires much more than good intentions and planning reform.

“Ministers have to address the fact that potential homeowners are unable to buy due to the lack of affordable mortgage lending and the absence for the first time in decades of any government support scheme (for first time buyers). Similarly, it needs to ensure housing associations are financially able to purchase the affordable homes house builders deliver. Without a functioning market for private or affordable homes it is impossible for industry to deliver them.

“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 build the homes the country needs.”

Meanwhile, in a separate report, Savills has forecast 840,000 new homes will be completed in the next five years to 2028/29, falling below the government target of 1.5m.

According to the real estate advisor, planning reforms will lead to an increase in the supply of consented land, but this will take time to feed through into higher completions.

It said demand for new homes - from individual buyers as well as private and social landlords - remains low, which presents a barrier to growth, as developers will only build if the demand for new homes is strong enough.

New homes completions fell by -6.5% in the year to March 2024 to 198,600 homes, a decline which was widely anticipated following the end of the Help to Buy (HtB) scheme in March 2023. For the 2024/25 year, Savills estimates that completions dropped further still to 180,700 completed homes, based on Energy Performance Certificate data.

Dan Hill, Savills research team, said: “Based on current policy and trends, housing completions are likely to remain low, between 160,000 and 170,000 per year over the next few years.

“While it is possible to exceed this, demand support would be needed. Even with this, delivery will be constrained by the speed at which the housebuilding sector can expand its supply chains and labour force. This means completions are still likely to fall short of the government’s target.

“At most, we think very significant demand support could push completions to 1.2 million new homes by March 2029.”

The reports come as the government today, 9 June, unveiled a revolutionary AI tool at London Tech Week which is set to transform the planning system and speed up housebuilding.

Prime minister Keir Starmer said  ‘Extract’ will digitise planning documents and bring England’s outdated planning system into the 21st century.

The tool is to be made available to all councils by spring 2026, using Google DeepMind’s Gemini model. Starmer said the digital planning transformation will help deliver the government's Plan for Change milestone to build 1.5m homes.

In test trials across Hillingdon, Nuneaton and Bedworth, and Exeter councils, Extract digitised planning records, including maps, in just three minutes each – compared to the 1–2 hours it typically takes manually. This means Extract could process around 100 planning records a day, significantly speeding up the process.

Chris Ball, president UK and Ireland at AtkinsRéalis, welcomed the news. He said: “Streamlining and digitising the planning system is at the heart of how infrastructure can unlock rapid growth around the UK.

“Deploying AI in this way will address resourcing issues, and create a foundation to build upon the work that has been done in pockets of excellence around the country to centralise planning data, standardise records and terms and provide a comprehensive and joined-up view of applications to speed up and simplify planning at city, town and county level.

“These kinds of efficiencies will ensure plans pass through the system more quickly, to deliver the benefits to people in need of new homes and better transport links to connect communities and open up opportunities.”