Affordable housing remains a priority

Access to good quality, affordable homes is a cornerstone of health and well-being and a long-standing priority. In the previous Senedd, the Welsh Government met its affordable homes target. The current target is more challenging because of how it is defined. It is to build 20,000 new low carbon social homes for rent during the 2021-2026 Senedd term.

The Welsh Government expects to fall short of the target

Our 2024 report said there were 19,913 homes that count towards the target either delivered, or in the Welsh Government’s pipeline for delivery, by March 2026. However, we said that delivering this number was unlikely without extra funding.

Exhibit 1 shows that the Welsh Government now expects to deliver 18,652 homes this Senedd term. This is 1,348 short of 20,000. The Welsh Government expects to hit 20,000 by November 2026.

Exhibit 1: cumulative delivery of affordable homes in Wales, 2021-22 to 2025-26 and April 2026

Source: Welsh Government, Progress towards the 20,000 affordable homes target, November 2025. Projected data is from Welsh Government management information at 17 October 2025.

Note: Since our 2024 report, the Welsh Government has clarified that, given the target covers the Senedd term, it will extend the period covered by the target to include April 2026. This data also includes homes delivered in April 2021, before the target period, but not counted in previous data releases.

The Welsh Government and wider housing sector have made significant progress but still have a lot to do to achieve revised projections

Exhibit 2 shows a long-term increase in the number of affordable homes delivered, although this data set does not fully reflect the affordable housing target. Delivery is at its highest since the data set began in 2007. This is a significant achievement for the Welsh Government and the wider housing sector.

Exhibit 2: number of additional affordable homes delivered between 2007-08 and 2024-25, and projected for 2025-26

Source: Welsh Government, Additional affordable housing provision by location, provider, funding and housing type, November 2025

Note: This data includes some homes that will not be counted within the target, such as shared equity homes. Also, it does not include homes funded via the Transitional Accommodation Capital Programme (TACP) that are included in the target. The Welsh Government set up the TACP to bring empty homes into use, remodel existing homes, and, since 2022-23, for acquisitions.

In 2024-25, 3,900 homes were delivered that count against the target. Compared to 2023-24, this was up by 10%.

But to achieve the Welsh Government’s projection, 4,936 homes needed to be delivered in 2025-26 (and a further 317 in April 2026). On this basis, delivery in 2025-26 would be 27% higher than in 2024-25.

Exhibit 3 shows that in the first six months of 2025-26, the Welsh Government delivered 977 homes. In the last six months and in April 2026, it will need to deliver 4,276 homes to achieve the projection of 18,652. This will be challenging, but the Welsh Government says it is confident in its projection which is based on information provided by the housing sector.

Exhibit 3: delivered and projected monthly delivery of affordable homes, April 2025 to April 2026

Sources: Welsh Government, Progress towards the 20,000 affordable homes target, November 2025. Projected data is from Welsh Government management information at 17 October 2025.

With the Welsh Government so focused on delivering homes by the end of the Senedd term, there is a risk that delivery will then fall. Exhibit 2 shows this has happened before. 

Between the last year of the previous target and the first year of the current target, delivery of affordable homes recorded by that data set fell by 26%. The Welsh Government's management information indicates that a similar trend is likely to happen following the current target period, although its forecasts do not yet reflect the full impact of recently announced TACP funding for 2026-27.

Despite improved reporting, the number of homes that meet the full target definition, and the overall net gain, is not completely clear 

The target clearly aims to drive construction of new homes, of a high standard, with low carbon emissions, so that more homes are made available at social rent levels. But our 2024 report found that the delivery figures included some homes that did not fit the definition suggested by the target. 

We recommended that the Welsh Government be more transparent by reporting how many of the homes that it counts towards the target are new build and low carbon. The Welsh Government has since improved transparency through its statistical release because:

• its information is clearer about how many homes counted under the target are for social rent, intermediate rent, or shared ownership;
• it provides a breakdown of how many homes are new builds;
• it has published management information with better up-to-date data on delivery and the pipeline; and
• it has improved data quality in relation to double counting of ‘voids’, where homes are delivered, become empty, and then become available again.

Nevertheless, the true number of homes delivered that meet the full target definition – new-build, low carbon social homes to rent – is still not completely clear from the published data.

Also, while the target drives increased delivery, it does not consider the net number of homes available. Many social homes are inevitably lost by being demolished, sold off or disposed of. In our view, for any future measures or targets to be more meaningful, they need to consider the net increase in housing stock.

The Welsh Government will have spent over £2 billion on delivering affordable homes between 2021-22 and 2025-26

Most Welsh Government funding that contributes to delivering affordable homes is for capital spending through the Social Housing Grant (SHG) and the TACP. Our 2024 report estimated that the Welsh Government needed to invest an extra £580 million to £740 million in capital funding to deliver all 19,913 homes in its pipeline at that time.

Since our report, the budget for SHG and TACP has increased. Welsh Government projections suggest it is likely to have spent around £1.9 billion through these schemes alone between 2021-22 and 2025-26. Wider spending on schemes that support delivery of the target takes this figure beyond £2 billion.  

While spending has increased, the cost of building each new home has continued to rise sharply. In 2021-22, the average Welsh Government SHG contribution was £93,000 per home. By 2024-25, this had risen to £187,731 per home.

The Welsh Government has been working with partners to break down barriers to delivery

Shortly after our 2024 report, the Welsh Government set up an Affordable Housing Taskforce that reported in May 2025. An implementation group is now bringing together various bodies involved in taking forward the taskforce’s recommendations. This group is also considering actions arising from our own recommendations and from a Senedd committee report on Social Housing Supply in November 2024. It is too early to fully assess progress.

However, one area of clear progress is around developing the planning system where, for example, the Welsh Government has:

• provided additional funding to Local Planning Authorities to recruit more planners;
• taken steps that aim to improve collaboration across the regions and to better understand local resourcing constraints; and
• given permission for Local Planning Authorities to increase their fees, with an expectation that higher fees will result in better planning services for users.

Our previous report highlighted that issues related to phosphate pollution in rivers were leading to some delays in delivering homes. Action taken since our report means that housing schemes affected by this issue can now go ahead where appropriate mitigations are in place.

The Welsh Government has learned wider lessons from the phosphates issue. It has been more prepared for the publication of condition assessments for marine Special Areas of Conservation (SACs) and has acted earlier to provide additional funding and bring stakeholders together to respond to the impacts for housing development.

The incoming government will be faced with a range of issues to consider

It remains to be seen whether there will be an affordable homes target after the Senedd election in May 2026. Regardless, the new government will face challenges on affordable homes. For example:

• The Welsh Government is currently concerned about ensuring there are the right skills and workforce to build homes. It recently hosted a roundtable with key stakeholders to think about solutions. But this issue will not be resolved quickly.
• Despite progress in unlocking housing schemes affected by phosphates pollution, the ongoing management of nutrients in rivers and marine SACs remains a key issue. 
• The Welsh Government will need to consider how it will provide longer-term funding certainty to the housing sector, to ensure a sustainable pipeline.
• It will also need to consider how it will respond to recently updated estimates of additional housing need. 

While we are not planning any wider reporting beyond this article at this time, we will keep a watching brief on this policy area. Importantly, we will continue to track Welsh Government action as it continues to respond to our previous recommendations.