Nearly two-thirds – 61% – of developers feel optimistic about this year’s residential property market and expect things to improve, a lender’s survey found.
Research from Shawbrook revealed that 18% of developers expected there to be a significant improvement in the residential property market in 2025.
The poll of 550 property developers suggested that the government’s plans to increase housebuilding were behind this confidence, as 28% said it would advance the market.
A further 28% were encouraged by planning reforms to support more projects, and 26% said housebuilding targets gave them hope that land and properties would become available for development.
According to 26% of respondents, there was already an increase in viewings and interest in their properties, and 23% said the pending stamp duty change drove most activity in the run-up to the deadline.
Developers also feel positive about proposed changes to mortgage lending, particularly for first-time buyers, with 27% saying this would boost property demand.
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Some 21% said financial pressures had started to ease for prospective buyers and a further 21% said the cost of labour and materials for their own businesses had also improved.
A fifth said lower mortgage rates were driving optimism in the market, and 19% pointed to increased buyer confidence.
Shawbrook’s study found that developers who operated mostly in the new-build sector or property conversions were the most confident, with 85% feeling positive about the housing sector’s future.
When asked about the performance of the market last year, 66% of developers said 2024 was better than 2023. Some 15% said the improvements were significant, while 13% felt the market worsened in the last year.
Terry Woodley, managing director 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.
“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 and 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.”
