Confidence among the UK’s small and medium-sized housebuilders has fallen significantly, with rising costs, economic uncertainty and weak market conditions prompting many firms to scale back investment plans.
New research from the Home Builders Federation (HBF) found that confidence across the SME housebuilding sector has deteriorated, with businesses citing persistent inflation, high borrowing costs and reduced buyer demand as major factors affecting future growth.
The SME Sentiment Survey suggests that many developers are delaying or reducing new projects as viability pressures continue to mount. Higher material and labour costs, combined with increased financing expenses, are making it more difficult for smaller builders to bring forward new sites.
Planning delays also remain a significant challenge, with respondents highlighting slow decision-making and stretched local authority resources as ongoing barriers to housing delivery.
The findings indicate that the combination of economic headwinds and planning constraints is having a disproportionate impact on SME builders, which typically have less financial resilience than larger developers.
HBF said the decline in confidence risks reducing the number of homes delivered by smaller builders, despite continued demand for new housing. The organisation is calling for measures to improve planning performance, support market demand and reduce barriers to development to help restore confidence and encourage investment.
The report highlights the important role SME builders play in increasing housing supply and delivering smaller sites, but warns that without improvements to market conditions and the planning system, many firms are likely to remain cautious about expanding their pipelines.
