A Deep Dive into How UK Housebuilders’ Feel About 2026

The Barclays Business Prosperity Index Housebuilding Deep Dive delivers good news to the industry.

Despite affordability pressures for buyers, regulatory challenges and financial caution, four in five UK businesses (83%) operating in housebuilding and its supply chains remain confident about their outlook for the year ahead.

Barclays combined data from 70,000 UK businesses and research from 500 industry leaders and 2,000 consumers for the report.

It also shows strengthening activity at the start of the development pipeline, sustained buyer demand for new-build homes and a major uplift in planned investment.

What are the key takeaways?

Key findings include:

• Architects (+2.3%) and quantity surveyors (+4.8%) recorded rising incoming cash flows between Q3 2024 and Q3 2025, signalling strengthening activity at the initial phases
• Smaller firms showed greater caution, reducing cash borrowed (-17.7%) while increasing savings buffers (+3%)
• A smaller number of larger firms have increased borrowing (+20%) and drawn down savings (-8.9%)
• Leaders plan to increase total investment by 38% over the next 12 months, including marketing (42%), new equipment (39%) and pay to attract talent (37%)
• New-build homes are most popular amongst younger buyers, with six in 10 Gen Z homeowners (61%) living in a new-build property, compared to 25% across all ages.

Investment and innovation gather pace

According to the research, talent, skills and AI are all becoming major investment focus areas.

Four in 10 businesses with skills shortages are investing in new construction methods to reduce manual labour, alongside developing early career schemes (39%) and focusing on training and upskilling (36%).

Jason Constable, Head of Real Estate, Barclays Corporate Banking, said: “The level of innovation we’re seeing across the industry from larger developers to specialist trades is encouraging, with businesses investing in technology, skills and modern construction methods to boost productivity.”

Jason adds: “These innovations, combined with stronger consumer demand for new-builds, present a significant opportunity for housebuilders. While affordability and planning delays still pose challenges, the underlying strength of demand points to clear potential for growth as market conditions stabilise.”

The report says the average intended AI investment of £441,281 reflects growing demand for AI-assisted design and planning (37%), renewable and energy efficient materials (36%), business management automation software (35%) and building information modelling (29 per cent).

 Momentum is strong in electronics, where intended AI spend exceeds £500,000, while plumbing (£380,000), carpentry (£347,320) and painting and decorating (£328,371) are also strong.

Future Homes Standard 

Nearly all firms (98%) say aligning with the Government’s Future Homes Standard is a priority for the next 12 months, but 82% are concerned that they will not be ready.

Support is most needed in installing low carbon heating systems, applying the new Home Energy Model and meeting updated ventilation standards. 

 Despite this, businesses are being proactive, with 30% investing in specialist equipment, training and technology to boost compliance.

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Gen Z has appetite for new-builds

A quarter of homeowners report they live in a new-build property, rising to 47% of first-time buyers.

New properties are most popular among Gen Z (61% of homeowners) with desirable location named as the top driver (28%).

One in five cited favourable mortgage terms, such as higher loan-to-value ratio, and 17% reported energy efficiency as a major reason for buying new. 

Despite strong buyer demand, there are still barriers to building.

One in four housebuilders report high construction costs as a major barrier, followed by rising inflation, cost of raw materials and meeting the requirements of the Future Homes Standard.

What buyers want

The report says new-build property developers expect buyers’ desire for customisation options, such as layout and finishes, to have the greatest impact on their approach, followed by expectations for upgraded digital infrastructure including high speed broadband.

However, consumers say the top factor is access to gardens or communal green space, followed by proximity to transport hubs and to parks or countryside.

Just 17% named digital infrastructure as a key influence, and 11% cited customisation.

John Ainsworth, Head of Real Estate, Barclays Business Banking, says: “Activity is generally subdued among SME housebuilders, with nearly three in 10 expecting no increase in output in the year ahead.

“Yet SMEs are working hard to overcome skills shortages and regulatory alignment, with their resilience coming through strongly as they show confidence in their future success.”

He adds: “If the industry is to hit the Government’s target and build the much-needed homes of the future, it’s vital we continue to support the scaleup of smaller regional players.”