Developers are increasingly optimistic due to upcoming planning reform and the government’s housebuilding targets 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. Developers who primarily build new builds or property conversions were the most likely to feel confident about improvements in the market (85%).

One of the key reasons for this optimism from developers is reportedly due to the Government’s ambitions to increase housebuilding, with 28% saying it would help to drive market improvements, whilst 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. 

Terry Woodley, MD of Development Finance at Shawbrook, said: “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.”

Activity levels within the residential property market increased with 26% saying they were already seeing an uptick in viewings and interest in their properties, 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.

Woodley added: “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.” 

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 cost of labour and materials having decreased recently. A reduction in mortgage rates (20%), and increased buyer confidence (19%) has also helped to spark optimism.