The Housing Shortage Isn't Going Away

Good morning,

The UK has a housing target on paper and a supply problem in reality.

Planning approvals are falling, construction is slowing, and the gap between policy and delivery is widening.

Here’s what the data is actually telling us and why it matters for anyone investing in property today.

Let’s dive in.

In this newsletter, you'll find...

• The Supply Crisis Is Getting Worse — And That's Bullish for Investors

• The Data Capital: Deal of the Week

• If You Remember One Thing, Make It This

• Feedback

The Supply Crisis Is Getting Worse — And That's Bullish for Investors

The government’s big housing promise (1.5 million new homes by 2030) is, frankly, stuck. It’s hitting the usual mix of planning red tape and scheme “viability” issues.

And with Keir Starmer now stepping down as Prime Minister, it’s hard to see any bold new housing push landing in the short term while Westminster is busy dealing with politics rather than planning reform.

Planning approvals for new homes in England fell for a fourth consecutive year in 2025, hitting their lowest level since 2019. In London alone, approvals crashed 72% year-on-year in Q3 2025. The Home Builders Federation called it a "viability crisis" and the data backs them up.

So Why Is This Good News for You?

This is where a lot of people get it wrong. They see headlines about falling house prices and slam the panic button.

Halifax shows UK house prices dipped 0.1% in May 2026 (that’s the third monthly fall in a row). Sentiment is shaky. The headlines are gloomy.

But sentiment and fundamentals are two very different things.

Under the surface, the structure of the market hasn’t changed: demand for rental housing has a floor, but supply just doesn’t have the legs to meet it.

The UK is still running with roughly a quarter fewer rental listings than before the pandemic, and landlords are continuing to exit thanks to the Renters’ Rights Act and rising costs.

That only tightens the screw.

Yes, rental growth has cooled to around 1.9%. But that slowdown is being driven by a temporary drop in net migration, not by a wave of shiny new homes magically arriving on the market.

Migration will stabilise again. When it does, demand comes back. Supply? That’s not catching up any time soon.

The Patient Investor's Edge

This is where the data gets interesting for anyone building a long-term portfolio.

When supply is constrained, it creates a sort of price floor. If fewer homes are being built, the good rental stock — especially in cities with solid job markets and decent transport links — tends to hold its value and its rent levels, even when the wider mood feels a bit off.

You can already see this in parts of the North.

In cities like Manchester and Leeds, rents are still up roughly 1.9–3% year-on-year, even as commentators talk about the rental market “cooling” or “rebalancing”.

The investors who come out on top in this kind of market are not the ones refreshing house price headlines every morning. They’re the ones who understand that government underdelivering on housebuilding is basically a multi‑year tailwind for the homes that already exist.

In short homes on the market become more valuable when less homes are being built.

Official house price data has the average UK home at about £270k as of April 2026, up around 3.8% over the last year. That’s not because we’re in some building boom. It’s because of scarcity.

The Data Capital: Deal of the Week

Location: Brough Street, Derby (DE22)

Strategy: High-Yield Buy-to-Let / City Centre Professional or Student Let

Why We Like It:

This deceptively spacious, freehold two-bedroom terraced home in the heart of Derby city centre is the standout deal.

It is priced at £160,000 (approximately 14% below the DE22 terraced average of £185,039) meaning you are acquiring genuine equity from day one, not just chasing yield.

The property boasts two reception rooms, a utility room, ground floor WC, a freestanding bath and separate shower, a premium specification for this price point that will appeal to working professionals or students and support a rent at the higher end of the DE22 market at around £850 pcm.

With an ROI of 4.7% and monthly cash flow of £158, this deal combines solid income, a below‑market entry price, freehold tenure, no chain, and strong capital growth prospects in DE22.

The Metrics (Forecast):

If You Remember One Thing, Make It This

The supply crisis isn’t new. It’s just getting worse, and the numbers are pretty clear:

• Planning approvals are at record lows.

• Construction activity is drifting down, not up.

• The rental supply gap is structural, not just a short-term wobble.

• Price dips on the charts are noise against a long-term story of not enough homes.

So if you’re sitting on cash waiting for the “perfect” entry point, this is your nudge. The structural case for UK property — especially good-quality buy-to-let in the right areas — hasn’t gone away.

The government can’t build its way out of this quickly, and every quarter of weak approvals quietly supports the value of what’s already standing.