# Housebuilders in focus as firms set to reveal figures amid sluggish market

By David Fell — 2026-01-09

David Fell, lead analyst at Hamptons, said: “Housebuilders have faced strong headwinds in recent years, which in many cases have squeezed profit margins on homes down into single digits.

“Typically, they’ve stood somewhere between 20-30 per cent.

“Falling house prices across much of Southern England, coupled with rising material and construction costs, have made many sites unprofitable.

“As a result, housebuilders have scaled back to conserve cash and ensure they’re not sitting on unsold homes.

“While falling mortgage rates are likely to give developers a shot in the arm this year, without a Help to Buy-style scheme to generate demand, it’s unlikely that the number of homes built is going to get anywhere near pre-Covid levels or the government’s ambitious 1.5m target.

“In recent years, the big buyers of new homes have all faced their own challenges.

“Small investors have been frozen out of the market by higher tax rates, while larger investors are grappling with higher borrowing costs, which have sabotaged viability.

“Investors tend to be the largest buyers of homes before they’re built.

“But last year, less than 30 per cent of new homes were sold off-plan, a figure which peaked at around 50 per cent in 2016.

“Off-plan sales are gold dust for developers.

“They bring in cash two or three years before a home is built, which reduces the sales risk and the length of time they need to borrow money.

“And when development finance can cost eight per cent plus, paying them back early can be a big boost to profitability.”

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