Why Scottish housebuilding has plummeted to ten-year low and is slower than during Covid

SNP ministers have been accused of fuelling Scotland’s “devastating housing emergency” after the number of new constructions started last year dropped to the lowest level in a decade, with progress stalling to a worse level than the pandemic.

Figures show the number of homes completed last year fell by 17 per cent, while starts dropped by 15 per cent to the lowest level since 2013/14. The number of homes finished by housing associations fell by almost a third in the past year.

Last year, homes approved through the Scottish Government’s affordable housing supply programme increased by 9 per cent, but there was also a 9 per cent drop in the number of completions and a 3 per cent fall in the number of starts.

New housing starts in Scotland have dropped to the lowest level in a decade

Of the 110,000 homes pledged by the Scottish Government by 2032, just 21,092 have been built. The situation could get worse still, with this year's housing budget slashed by around £200 million by SNP ministers after a capital funding cut from Westminster.

A total of 19,632 homes were built across Scotland in 2023/24 – a drop of 4,150 from the previous year – while construction began on 16,404 homes. In the social housing sector, 5,043 homes were completed while 3,500 residences were started.

David Alexander, chief executive officer of estate agents DJ Alexander Scotland, said: “Given that eight Scottish councils have declared a housing emergency in the last year, it is surely sobering to see that all sector new build starts have fallen 15.5 per cent and completions are down 17.4 per cent.

David J Alexander, CEO of DJ Alexander Scotland Ltd (Picture: Laurence Winram)

“The newbuild starts are the lowest annual figure since 2013/14 and are even lower than during the pandemic.”

Mr Alexander added: “Given the immediate need for more new houses, it is unbelievable that new build starts should remain so low. We desperately need encouragement for the private sector to invest and build new homes now and for the next decade and sustained and growing investment in the social sector to end the current crisis.

“New build social housing is at just 3,500 in the financial year 2023/24, which is the lowest figure since 2012-13 and comes at a time when waiting lists are at a record high. Clearly these figures are a sign that no progress is being made on resolving the current housing emergency. In fact, this is a clear indication that the situation is getting worse.”

Earlier this year, MSPs voted to declare a housing emergency in Scotland, but SNP ministers have been criticised after cutting their affordable housing budget by almost £200m this financial year.

SNP Housing Minister ​Paul McLennan (Picture: Jeff J Mitchell/Getty Images)

In the 2023/24 Budget, the Scottish Government spent £752m on the programme. But that will reduce to £556m this year – a £196m cut in cash terms or £205m in real terms. This financial year will be the second straight year the Scottish Government has reduced funding for the programme.

The Scottish Federation of Housing Associations (SFHA) has stressed the decline in housebuilding applies to the period before the Scottish Government’s £196m cut to affordable housing took effect, warning it is likely that worse is to come.

SFHA chief executive Sally Thomas said: “Today’s dire statistics should serve as yet another wake-up call to the Scottish Government about the extent of the housing emergency and the immediate challenges we face in delivering affordable rented housing.

“Starts and completions of new homes are down in every sector and it’s clear we are seeing a collapse in housebuilding. Our housing associations are key to delivering the warm, high quality, affordable homes, which will end the housing emergency. But successive Scottish Government cuts are threatening their ability to deliver.“

Scottish Labour housing spokesman Mark Griffin said: “Scotland is in the grips of a devastating housing emergency – from soaring rents to unaffordable mortgages to record levels of homelessness. Far from taking the urgent action needed to fix this crisis, the SNP has fuelled it.

“While housebuilding plummets once again, the SNP is ploughing ahead with its disastrous plans to slash funding for affordable housing.”

Scottish Conservative housing spokesman Miles Briggs accused the Scottish Government of having “totally failed” to address the issue.

He said: “The SNP’s brutal cuts to both council funding and the housing budget has left local authorities unable to help people move into affordable and safe homes. These statistics should be a source of shame for SNP ministers, who have been asleep at the wheel, while the number of new homes being built fell dramatically.

“The SNP’s failure to tackle the housing emergency has led to homelessness spiralling out of control and a record number of children being stuck in temporary accommodation.”

Alison Watson, director of charity Shelter Scotland, said the continued decline in social homes being delivered was “inevitable” as a result of “repeated cuts to the housing budget”.

She said: “Investing in social housing means investing in people’s health and in our communities. Delivering more social housing is the only way to provide permanent homes for the 10,000 children in Scotland who are trapped in temporary accommodation.”

SNP housing minister Paul McLennan said: “We will continue to build on that record with almost £600m of investment in the affordable housing supply programme in 2024/25.

“I recently outlined the Scottish Government’s plan to tackle the housing emergency with three key pillars forming part of our approach: more high quality, permanent homes; the right homes in the right places; and a permanent home for everyone.

“While we remain focused on delivering 110,000 affordable homes by 2032, our capital block grant is being reduced by nearly 10 per cent, a loss of more than £1.3 billion by 2027/28. Likewise, our financial transactions budget – key to delivering affordable housing – has been cut by 62 per cent.”