David Fell, lead analyst at Hamptons, said: “Falling mortgage rates have helped germinate some green shoots of recovery among housebuilders, with early signs suggesting the number of would-be buyers visiting show homes so far this year is up on the same time in early 2025.
“Developments marketed at second and third steppers have done particularly well so far this year, with falling monthly mortgage payments starting to tempt more homeowners into trading up into a larger place.
“But the lack of a replacement for the Help to Buy scheme in the budget means for many developers the going is still tough.
“The current trajectory means the government’s target to build 1.5m homes this parliament is going to be missed by around a third.
“While increases in build costs have stabilised, these costs have often levelled out 40-60 per cent above where they were five years ago.
“And in most of the country, house price growth hasn’t kept pace, leading to squeezed margins on many sites.
“In the last downturn, the affordable elements of developments were housebuilders’ hedge against a tough sales market.
“But these times have long gone.
“The market for affordable homes remains particularly tricky, with few housing associations in a position to purchase the affordable homes delivered alongside private developments.
“In some cases, the lack of buyers for the affordable elements is blocking future phases of development.
“Planners often require affordable homes to be occupied before any more homes can be built or sold.”
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