Brokers operating in development finance are unsure as to which housing sector shows the best potential for growth over the next three years, whilst almost three quarters (73%) expect volumes of development finance business to increase over the next 12 months according to a survey carried out by United Trust Bank.

The results show that 23% of brokers thought first time buyer properties offered the best potential for growth while 21% thought family housing offered better prospects. The least favorable sectors included luxury flats, retirement housing and eco-friendly developments.

Brokers were asked: Which development sector has most potential for growth over the next three years and the results were as follows:

23% - FTB
21% - Family housing
15% - One-off individual homes
14% - Social housing
8% - Luxury family homes
6% - Eco friendly housing
5% - Luxury flats
4% - Retirement
4% - Other

Commenting, Noel Meredith, Director at United Trust Bank said: “The split in broker opinion is interesting and it’s easy to see why there’s an assumption that the first time buyer sector offers the best prospects for property developers. There’s been a lot of publicity recently about the need to ‘kick start’ the FTB market and I suspect brokers believe that if developers can find a winning formula then there’s a ready market for them.

“However, the stumbling block could still be that younger buyers without substantial funds are barred from entering the property market or making the second step up the ladder because of the unrealistic demands from mortgage lenders for high percentage deposits. If 85-90% mortgages become more freely available at competitive interest rates then brokers and developers could well see a surge in the FTB sector, but it’s far from guaranteed.

“Developers can find success in most sectors but they need to do their homework and demonstrate a very high level of local knowledge and expertise at matching the right product with the right buyers in the right locations. In today’s market the most important thing is to establish not just who wants a property but who can afford it, but that doesn’t mean ruling out luxury homes.”