Scotland’s housing shortage deepens as housebuilding falls for third year

Scotland is building homes too slowly to meet rising demand, with new housing completions falling for a third consecutive year as homelessness reaches record levels, a BBC Scotland analysis reports.

More than 19,000 households were living in council-funded temporary accommodation in 2025-26, up 10% on the previous year. That included 10,715 children. A further 35,000 households were assessed as homeless or at risk of homelessness.

Scotland completed 17,640 new homes in the year to March 2026, the lowest figure in three years. Starts on new projects over the past two years were also at their lowest level since 2012-13, leaving little prospect of a quick increase in supply.

The BBC report points to several pressures on building: higher construction costs, a shortage of suitable land and delays in planning permission. Housebuilders also say recent regulations have added to costs. Housing Secretary Shirley-Anne Somerville told BBC Scotland that standards on energy efficiency, heating and cladding safety would improve homes and help reduce energy bills.

A mismatch between supply and need

Building is unevenly distributed. The Lothians accounted for 32% of homes completed in 2025-26; including Fife, the share rose to 39%, despite those areas having 23% of Scotland’s population. Glasgow and surrounding councils had 32% of the population but 26% of completions.

Glasgow faces particularly acute pressure: the council spends almost £70m a year on hotel accommodation for people experiencing homelessness, and the Scottish Housing Regulator has described the city, along with Edinburgh, as being in “systemic failure”. Yet Glasgow had fewer new housing starts last year than East Lothian, which has a much smaller population.

The report also highlights the shortage of affordable homes. The Scottish Government’s target is to complete 110,000 affordable homes by 2032, with 36,500 delivered so far. In 2025-26, the Affordable Housing Supply Programme recorded 6,832 completions, down from 10,466 in 2022-23. The Scottish Parliament Information Centre says an average of about 15,000 homes a year is now needed to meet the target.

Ministers have pledged £4.1bn over four years to support around 36,000 affordable homes. But modelling by the Fraser of Allander Institute suggests the 110,000-home target is more likely to be reached in late 2036. The Government says it remains focused on the target, while acknowledging that it is challenging.