Data shines light on housing’s burgeoning bottleneck
A rise in planning applications has seen the pipeline of residential projects grow nationally but construction output is at its lowest rate since the pandemic, according to data from TerraQuest and S&P Global.
TerraQuest, the company that operates the planning portal in partnership with the government, has reported a year-on-year increase in residential applications.
New home applications increased by nearly a third between April and June 2025, compared to the same period in 2024, according to TerraQuest, which described the upward trend as a “promising snapshot”.
The dataset covers 95% of the planning applications made to local authorities in England and shows 69,597 new homes were applied for during Q2, up from 52,282 during the same period a year earlier.
Geoff Keal, chief executive at TerraQuest, said that data shows “clear signs of sector recovery”.
He added: “The recent uplift points to growing confidence among developers and housebuilders, likely driven by positive policy signals, including the revised National Planning Policy Framework and the Planning and Infrastructure Bill currently progressing through the House of Lords.”
While developers seem content to feed the machine and get the planning process underway, what is being spat out the other end is underwhelming in terms of volume.
S&P Global reported a “considerable slump” in construction activity for July.
Its latest construction PMI report states that activity fell at the steepest pace since May 2020 with “a considerable drag…from a fresh drop in residential building” identified.
Joe Hayes, principal economist at S&P Global Market Intelligence, said: “Forward-looking indicators from the survey imply that UK constructors are preparing for challenging times ahead.
“They’re buying less materials and reducing the number of workers on the payroll.”
He added: “Expectations also continue to underwhelm, despite a modest pick-up in confidence from June’s two-and-a-half-year low. Anecdotally, companies reported a lack of tender opportunities and a hesitancy from customers to commit to projects. Broader themes of uncertainty, both domestically but also internationally, will do little to reignite investment appetites.”
I think what we are noticing is a coming together of 2 factors which is slowing the progress of schemes from planning stage to construction.
I am seeing this across clients.
firstly in the residential apartments market, the HRB regs and BSA gateway 2 processes are continuing to have a chilling affect, in terms of time and also funding for costs. Funders are now asking more and more for gateway certification prior to offers of lending and no lenders are offering to assist developers in providing support in the costs to move from gateway 1 to gateway 2, putting extra burden on developers limited own cash reserves.
Secondly it is interesting to note that there is recent anecdotal evidence that housing values are coming down suggest a serious squeeze on the demand side for Housing, this in turn will obviously put the brakes on the supply side.
I have clients, both Developers and Contractors that seeing their markets cooling some what and in reality have in the whole of the last quarter.
Recent evidence is pointing to a real economy contraction hitting Q4 this year.
By Chris Boles
I wonder how many of the applications made are from landowners, land promoters and on sites under option where there there is arbitrage at play in a more encouraging planning environment and where housing growth has been limited for many years. Seeing things built out is another dynamic in terms of economic climate not just demand and includes funding, interest rates, costs and market stability. In the current environment I’m not surprised output is low but applications are up. I suspect all waiting for green shoots or tax rises
By Max H
It is only a matter of time when conditional land deals will be conditional on planning and a gateway 2 approval. That is how crucifying the engagement with BSR has been to date.
By Anonymous