UK Property Development Market Outlook 2026: Cautious Optimism, Selective Opportunity

Posted by The Landsite on 5th January 2026 -

This brief article examines wider expectations for 2026, with the UK development market anticipated to experience a steadier, more workable year rather than a dramatic boom.

Construction Forecast

Forecasts point to a return to growth in construction activity, with the Construction Products Association projecting total construction output rising in 2026 (their Autumn 2025 forecast puts growth at around 2.8%). constructionproducts.org.uk Infrastructure is expected to remain a key stabiliser, with CPA forecasts (as reported by RICS) suggesting infrastructure output could grow by 4.4% in 2026, supported by major programmes and energy/water investment. RICS

Demand and pricing: a modest rebound, not a sprint

Residential demand should improve if borrowing costs ease. After a softer late 2025 market, Rightmove has indicated improved buying conditions in 2026 and forecast around a 2% rise in asking prices over the year. Financial Times+1 For developers, that points to better sentiment, but continued sensitivity to affordability, especially areas outside of prime locations and for higher cost schemes.

The Sunday Times Best Places to Live 2025

Policy and planning: momentum, with execution risk

The Government’s stated ambition to accelerate delivery including a target of 1.5 million homes over this Parliament keeps planning reform at the centre of the outlook. GOV.UK

If reforms translate into faster decisions and clearer land allocation, land markets could become more liquid. If implementation is uneven across local authorities, timelines will still vary widely by district.

The government’s ambition to increase housing delivery has kept reform high on the agenda, but progress will depend on how consistently changes are applied at a local level. Developers who engage early with planning authorities and understand local priorities will be best placed to move forward efficiently.

What this means on the ground

In 2026, the strongest opportunities are likely to be strategically located, needs driven projects such as: small to mid scale housing, retirement, specific needs based stock, and schemes aligned with infrastructure and utilities investment.

Cost control, buildability, and planning strategy will remain the differentiators so the best performing developers will be the ones who can plan accordingly, calculate the level of risk early on and deliver.

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