UK Residential Property Market 2025: Developer Confidence

Optimism among developers

Upcoming planning reform and the government’s house building 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.

Key drivers of market improvement

Several factors are contributing to the positive outlook for the residential property market:

1. • Government Housebuilding Targets: The government's commitment  to increasing housebuilding is a major driver of developer confidence. 28% of developers believe these targets will help drive market improvements. Furthermore, 26% said housebuilding targets had given them confidence that good land and properties will become available for development.
   • Planning Reforms: Upcoming planning reforms are expected to support more developments, with 28% of developers encouraged by these changes.
   • Stamp Duty Relief: The removal of stamp duty relief for first-time buyers has spurred market activity, with 23% of developers citing this as a key driver of activity ahead of April 2025.
   • Mortgage Reform: Discussions around mortgage reform for first-time buyers are anticipated to boost demand for properties, with 27% of developers expecting positive impacts.
   • Financial Pressures: Easing financial pressures for both prospective buyers and developers, including reduced costs of labour and materials, have also contributed to increased optimism according to 21% of developers. A reduction in mortgage rates (20%), and increased buyer confidence (19%) has also helped to spark optimism.

New Build and Property Conversion Confidence

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.

Terry Woodley, MD of Development Finance at Shawbrook comments:

“Despite wider economic uncertainty, it's encouraging that within the residential property market there are green shoots of optimism. 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.

“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.”

_Methodology

_{Research was conducted by Censuswide between 06.02.2025 and 24.02.2025, surveying 568 property developers aged 18+ across England, Wales, and Scotland.}