"It's evident from our research that the government’s ambitions for the housebuilding sectors have helped to drive confidence amongst developers, and this, combined with an uptick in buyer confidence, is creating a positive picture for 2025"
- Terry Woodley - Shawbrook
Upcoming planning reform and the government’s housebuilding targets have sparked optimism for developers in 2025, with a quarter already seeing residential market activity increase, according to new research from Shawbrook.
61% of property developers think that the residential property market will improve in 2025, while 18% think it will significantly improve.
Research amongst over 550 UK property developers, commissioned by Shawbrook, pointed to the Government’s ambitions to increase housebuilding as one of the key reasons for this optimism from developers, with 28% saying it would help to drive market improvements. A further 28% were encouraged by planning reforms, which will help to support more developments, and 26% said housebuilding targets had given them confidence that good land and properties will become available for development.
Activity levels within the residential property market are already increasing, with 26% saying they were already seeing an uptick in viewings and interest in their properties. This has been in part due to the removal of stamp duty relief for first-time buyers, with 23% pointing to this as the main driver of activity ahead of April.
Developers have also been encouraged by discussion around mortgage reform for first-time buyers, with 27% saying they expected this to boost demand for properties. 21% also felt that financial pressures had started to ease, both for prospective buyers (21%) and for their own businesses, with the cost of labour and materials having decreased recently. A reduction in mortgage rates (20%) and increased buyer confidence (19%) have also helped to spark optimism.
Developers who primarily build new builds or property conversions were the most likely to feel confident about improvements in the market (85%).
Looking back on the past year, 66% of property developers felt that the residential property market had improved in 2024 compared to 2023, with 15% saying that it had significantly improved. Just 13% felt that it had worsened in the last year.
“Despite wider economic uncertainty, it's encouraging that within the residential property market there are green shoots of optimism," explained Terry Woodley, MD of development finance at Shawbrook. "It's evident from our research that the government’s ambitions for the housebuilding sectors have helped to drive confidence amongst developers, and this, combined with an uptick in buyer confidence, is creating a positive picture for 2025."
He concluded, “While the impact of the stamp duty relief ending has been the main story for the market in the first quarter of the year, developers will be hopeful that the measures announced in the Planning & Infrastructure Bill will continue to fuel activity across the rest of the year. However, with some of these measures likely to take time to come to fruition, developers will likely still be looking to the government to deliver further effective reform that can boost activity now.”
