Developer confidence fell sharply during the first quarter of 2026 as rising economic uncertainty, planning delays and funding pressures combined to create a more challenging environment for residential schemes.
Research commissioned by Octane Capital found that just 35% of developers now expect UK property market conditions to improve this year, down from 67% in Q4 2025.
At the same time, reliance on specialist finance continues to strengthen, underlining how developers are increasingly turning to bridging and alternative lending solutions to navigate a more volatile market.
According to the survey, 72% of developers now expect to use specialist finance during 2026, up from 65% in the previous quarter. Bridging finance saw the strongest rise in anticipated demand, increasing from 33% to 40%, while expected usage of refurbishment and light development finance climbed from 18% to 24%.
UNSTABLE BUILD COSTS
The findings suggest that while development activity may slow in the short term, demand for bridging and specialist funding is likely to remain elevated as developers prioritise flexibility and speed over traditional lending routes
The figures reflect growing pressure on developers trying to progress projects amid unstable build costs, uncertain funding conditions and slower decision-making across the wider market.
Project appetite has also weakened considerably. Just 20% of developers now say they are more likely to start or progress schemes this year compared with 2025, down from 36% in Q4. Meanwhile, the proportion saying they are less likely to proceed has risen to 37%.
Planning delays remain a major obstacle, cited by 21% of respondents, while 17% highlighted funding delays and uncertainty. However, build and labour costs continue to rank as the biggest overall challenge, identified by 29% of developers surveyed.
For the bridging market, the findings reinforce the growing role specialist lenders are playing in helping developers manage uncertainty, secure sites and maintain momentum where mainstream finance is proving slower or less flexible.
CHALLENGING MARKET
Jonathan Samuels (main picture, inset), CEO at Octane Capital, says: “The first quarter of the year has clearly seen confidence soften amongst developers, with economic uncertainty, funding pressures, and wider market instability all weighing on sentiment.
“The market remains extremely challenging to navigate and, whilst developers still want to progress projects, many are becoming more cautious around timing and delivery.
“At the same time, the increase in demand for specialist finance highlights just how important speed and flexibility have become within the current environment.
“As transactions become more complex and conditions continue to shift, developers are increasingly looking towards specialist lenders who can provide the certainty and agility required to keep projects moving forward.”
