This is an update to an article we originally wrote in 2023. A lot has changed in the intervening years, so we want to explore whether property development remains a viable business in 2026 and beyond.
Although the financial shockwaves of the cost-of-living crisis, the pandemic, and the Ukraine War have subsided somewhat, we still live in uncertain economic times. Although the Labour government promised a property building revolution, a slashing of planning laws and major investment in planning officers, the effects have yet to materialise.
The government remains behind schedule to meet its target of 1.5m new homes by 2030, and rising house prices are cutting many people off from the housing ladder. However, there are signs of stabilisation and improvement.
Let’s take a look.
The UK Property Development Market in 2023
Property development remains a viable business for many in 2026 and beyond. For many, 2025 was the year when volatility reduced, and the signs of stabilisation came into view.
For example, by mid-2025, housing starts in England rose by approximately 15% year-on-year, a sign that developers were breaking ground on more projects. However, completions remained lower than in 2024 due to the lag time of projects started during the high-interest period of 2023.
Of interest to first-time buyers in particular, Homes England reported that affordable housing made up roughly 79% of all new starts in the 2024/55 financial year, and 61% of property developers expected the market to improve because of the return of mandatory housing targets for local authorities and planning reforms.
There is still a huge demand for housing in the UK across the rental and private sectors. The UK has experienced a shortage of housing for decades, especially in urban areas, and with a rising, ageing population, this only looks set to continue, even with signs of cautious optimism.
Despite the difficulties, developers can capitalise on this demand by creating housing for a range of customers, including first-time buyers, families, and investors. This is especially true in London and the commuter areas of the South East.
Furthermore, initiatives like shared ownership schemes provide financial support to potential buyers, expanding the pool of potential customers and ensuring a consistent demand for newly developed properties.
Likewise, the peculiarities of supply and demand within the UK property market offer regional variations that savvy developers can exploit. For example, we’ve seen that Kent is a property hotspot within the South East, while East Sussex is lagging behind its neighbours.
While demand remains high in major cities like London, smaller towns and rural areas also present opportunities. As remote work continues to be commonplace, some individuals are seeking properties in less densely populated regions, leading to increased demand for suburban and rural developments. Likewise, properties in traditional leisure areas such as the coast or near national parks represent great opportunities for holiday lets or second homes.
In short, property development is still very profitable and viable for many, as long as concerns around costs and planning can be successfully negotiated.
New Build Property Development for a New Generation
Developers are also adopting innovative approaches to maximise space utilisation, energy efficiency, and sustainability to appeal to younger and more conscientious buyers. Modern designs and amenities cater to the preferences of the millennial and Gen Z populations, the latter of which are increasingly entering the housing market. Integrating smart technologies, green spaces, and communal facilities adds value to properties, allowing developers to target wealthier buyers.
In addition, the UK continues to be seen as a global financial and business hub, which can help attract international buyers looking for secure investments. London and the South East, in particular, remain a top target for foreign investment and experience high demand for luxury properties and upscale developments. The stability of the UK’s legal and financial frameworks, along with its high-quality cultural and educational institutions, continues to make it an attractive proposition despite the aforementioned problems around inflation and cost of living.
As energy bills and the cost of living continue to impact household finances, those looking to buy may be spurred to look at energy-efficient new builds that can help reduce their monthly outgoings. Property developers who can capitalise on this trend by building properties that cater to the South East market specifically may be in a position to create healthy profits.
While property development is far from booming, it will remain profitable in the UK in 2026 and beyond due to a combination of factors. If the trend in property starts continues, the market should pick up significantly over the coming years. Similarly, persistent housing demand driven by population growth, government initiatives such as planning reform and housing target, strong international investment and a focus on green, energy-efficient homes could all help.
Secure Your Property Development Finance for 2026
At Hunter Finance, we’re experts in providing property development finance to a range of customers across the South East. We’re always eager to work with new clients, so contact us today to discuss your needs and how we can help fund your next project.
