Scotland’s housing market faces a deepening crisis driven by strict planning policies and rising costs which continue to stall new developments, according to new research.
Faisal Choudhry, director of residential research in Scotland for Savills, said that together with policy uncertainty this is creating a “perfect storm”.
He adds: “Even though demand remains strong, the ability to deliver new homes has never been more challenging.”
According to the Savills research, the housing emergency, declared in May last year, has been exacerbated by National Planning Framework 4 (NPF4), government guidelines to protect strategic land use.
These have inadvertently curtailed housing delivery by restricting development to allocated sites, says Savills.
“Local authorities now face outdated local plans, with no immediate replacements, leaving developers unable to progress new applications,” says Choudhry.
“The planning system is simply not adapting fast enough to Scotland’s housing emergency. Many viable sites are stuck in limbo, and developers are struggling to secure new land.”
The Savills research says the impact of these constraints is clear: housing completions fell by 7% in 2024, with social housing delivery plummeting by 22% because of budget cuts. The private sector saw a marginal decline, but 20 of Scotland’s 32 local authorities recorded annual drops.
Meanwhile, major development applications fell from 97 in 2022/23 to just 77 in 2023/24, pushing Scotland further away from its housing targets.
Even when planning approvals are secured, financial pressures mean many sites remain undeveloped. UK-wide build costs have soared by 14% in three years, outpacing Scottish house price growth (4%).
“Increases in planning gain requirements and labour shortages are making many sites unviable,” notes Choudhry. “Without clear financial support, developers – especially SMEs – are finding it impossible to deliver new homes.”
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