🏡 UK Property Market Outlook 2025–2026: Sales, Development & the SME Opportunity

As we pass the halfway mark of 2025, the UK property market is showing signs of cautious recovery. While challenges remain—especially around affordability and planning—the landscape for both buyers and builders is shifting. Below, we break down the key trends shaping the market now and into 2026.

📊 Property Sales: Stabilising with Modest Momentum

Property transactions in 2025 are expected to reach around 1.15 million completions, according to Zoopla—marking a slight uptick from 2024. This reflects stabilising mortgage rates, improving buyer confidence, and increased housing stock.

Looking ahead to 2026, forecasters predict further steady growth, with sales potentially reaching 1.2 million. The driver? Continued real wage growth, marginal mortgage rate reductions (dropping below 4.5% for many), and more flexible lending criteria.

🏗️ New House Building: Shortfalls and Future Hope

New home delivery remains well below the UK Government’s 300,000 homes/year target. In 2024, around 193,000 homes were built—a figure that looks to stay largely flat in 2025 due to high build costs, labour shortages, and planning delays.

However, government-backed reforms—including faster planning approvals and SME builder support packages—are beginning to take shape. From 2026, this could result in a noticeable uplift in supply, particularly on smaller, previously underutilised brownfield sites.

SME Developers: Central to Future Growth

Smaller developers—once responsible for 40% of all new homes—have seen their share shrink dramatically over the past decade. Key issues include:

• Lengthy planning processes (often over 12 months),

• High upfront costs and Section 106 contributions,

• Difficulty accessing development finance and land.

The government’s 2025 Housing Delivery Action Plan specifically targets these bottlenecks. With tailored finance packages and streamlined planning reforms, SME builders are poised for resurgence—especially in regional markets where volume builders have limited reach.

🌍 Regional Trends: North Up, South Cooling

Property performance remains highly regionalised:

✅ Stronger areas:

• Northern England, Scotland, Northern Ireland – Sales volumes and price growth outpacing national average.

• East Renfrewshire – Scotland’s top-performing area with +10.6% annual growth (Feb 2025).

🚫 Weaker areas:

• London and South East – Stagnation or modest price drops (~1–2%) due to oversupply and affordability ceilings.

• South West – Particularly slow-moving markets outside urban cores.

  

  
  

🔮 2026 Outlook: Measured Optimism

Trend	Impact
Falling mortgage rates	Renewed affordability and buying activity
High listing volumes	Buyer power rising in negotiations
SME builder support	More new homes on small plots and brownfields
Delayed large-scale builds	Volume impact delayed until post-2026

With macroeconomic pressures easing and more targeted policy support, 2026 could mark a turning point. SMEs, in particular, are expected to play a vital role in boosting supply while large-scale new town developments begin to break ground.