Housing minister Matthew Pennycook has confirmed that Labour’s plan to build 1.5 million new homes by 2029 will affect property prices, telling MPs the “best scenario” would be a sustained levelling-off in house price growth. The comments come as average UK property prices have topped £300,000 for the first time.
Supply increase would cut prices by 2 percent
Speaking in the House of Commons, Pennycook outlined the relationship between housing supply and affordability. He said: “If you flood a local housing market with homes of any tenure, you will have a positive impact on housing affordability.”
The minister cited research indicating that a one percent increase in housing supply would result in a two percent decrease in property prices. However, he emphasised that any adjustment would occur gradually rather than sharply.
Pennycook told MPs: “It will take some time – even if we had high and sustained rates of housebuilding of the kind that we hope the reforms we’re making will secure – to see house prices drop. I think the best scenario that we can expect is a sustained levelling-off of house price growth, and then a gradual easing of it over time.”
Delivery targets face scepticism
The government’s ambitious target faces considerable scepticism from those responsible for delivering it. Data from public sector procurement firm Pagabo indicates that fewer than one percent of civil servants working on housing delivery believe the 1.5 million homes target is achievable.
The minister’s comments come as the latest Halifax House Price Index shows average UK property prices exceeded £300,000 for the first time. The index recorded a 0.7 percent rise in January, bringing the average property price to £300,077 following a 0.5 percent decline in December.
For buy-to-let investors, the admission that government policy aims to reduce property values adds another consideration to the investment equation. With planning reforms already underway and regulatory costs rising, any erosion of capital values could push more landlords to exit the market.
The government’s housing plans represent a significant intervention in the property market, with implications for homeowners, investors and first-time buyers. The actual impact will depend on whether construction targets can be met and how quickly new supply enters the housing market.
Editor’s view
Ministers rarely admit their policies are designed to reduce asset values, making Pennycook’s candour notable. For landlords, the message is that even the best-case scenario involves stagnant capital growth while costs continue to rise. Whether 1.5 million homes actually get built is another matter – but the policy intent is now on record.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 12 February 2026
Sources: House of Commons, Halifax House Price Index, Pagabo
Related reading: UK house prices top £300,000 as Halifax reports new milestone
