These grants will be made available over the next decade for local authorities, private developers and housing associations.

Social landlords will also be able to raise rents by 1% above inflation for the same period.

“This government is renewing Britain, but I know too many people in too many parts of our country are yet to feel it,” Reeves told MPs.

“This government’s task — my task as chancellor — and the purpose of this spending review is to change that.

“To ensure that renewal is felt in people’s everyday lives, their jobs, and on their high streets.”

The news has been welcomed by the property industry.

“Rachel Reeves is backing up her planning reforms with the funding required to build the social and affordable homes the nation so desperately needs,” said Richard Beresford, CEO at the National Federation of Builders.

“This is a significant step in the right direction and demonstrates that both the prime minister and chancellor have a long-term plan to fix the housing crisis and are not afraid to share the limelight for the good of the nation.”

Looking ahead, Market Financial Solutions CEO Paresh Raja claimed the announcement could signal “a notable step forward” and simulate further investment activity.

“Government investment will encourage activity from the private sector, injecting fresh life into the housebuilding industry,” said Paresh.

“As ever, lenders must be ready to respond in turn; ensuring different types of borrower, from first-timer buyers to seasoned investors, are supported with the right products and fair, diligent ways of assessing applications is going to be absolutely vital in creating a more equitable future for the UK property market."

Peter Rainier, principal director of planning at DMH Stallard, said: "To ensure the wider aspiration for high volumes of housing over the coming years, there is still much to be done.

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“Particularly in ensuring local planning authorities are properly resourced, SME's are assisted and through the Planning Bill, that strategic/local plans are progressed efficiently and development is not unduly hampered by concerns relating to surface water and environmental protections."

Chris Baguley, managing director of corporate, at Together, said: “The Chancellor’s £39bn cash injection over the next ten years is a significant boost to social and affordable housing in this “age of insecurity”.

“This could be a pivotal moment in the government’s race to build 1.5 million new homes. With at least 350,000 homeless people in England right now — direct action like this is critical to help those at risk — and quickly.
 
“Reeves’ signposts to a new affordable homes programme as part of the planning reforms already underway are also welcome — albeit light on detail as to the actual scale and location of these properties.

“While upfront investment at this scale is promising — it is only part of the solution. More support for social housing developers and their trusted lenders is vital for ongoing projects, providing more affordable housing and community spaces where they are needed most.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, commented: "The additional funding of £39bn for social and affordable housing and easing of borrowing rules is of course very welcome but what we want to see is more ‘boots on the ground’ – and asap.

“Governments cannot tell housebuilders when and how much to build but can make it easier for them to gain deliverable consents for certain types of property or companies - such as SMEs.

“For instance, the government could encourage more supply of energy-efficient, affordable homes of quality, initially on publicly owned land, offering incentives to other landowners to release and accelerate delivery of previously consented sites.”

Daniel Austin, CEO and co-founder at ASK Partners, said: “This funding, if deployed effectively, could mark a turning point in tackling the UK’s deep-rooted housing crisis.

“Crucially, investment must now be matched by urgent planning reform, proper resourcing of local authorities, and meaningful support for SME housebuilders.

“Labour’s target of 300,000 homes a year has been pledged before but never met. To succeed, this government must take bold, pro-growth steps, freeing up brownfield sites, embracing technology in planning, and ensuring lenders support a broader range of borrowers.”