"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"
- Jonathan Samuels - Octane Capital
Developer confidence has weakened sharply in Q1 2026, with just 35% of developers now expecting UK property market conditions to improve this year, down from 67% in Q4 2025.
At the same time, reliance on specialist finance is growing, with 72% of developers planning to use it to navigate current market conditions, up from 65% the previous quarter.
The findings come from Octane Capital's quarterly survey, which tracks how developer sentiment, project appetite and demand for specialist finance are shifting as conditions evolve.
Appetite to progress new projects has also softened. Only 20% of developers say they are more likely to break ground on development or investment projects in 2026 compared to last year, down from 36% in Q4 2025. The proportion saying they are less likely to proceed has risen from 30% to 37%.
Bridging finance remains the most widely anticipated product, with expected usage climbing from 33% to 40% quarter on quarter. Refurbishment and light development finance also saw a notable increase, rising from 18% to 24%.
The challenges facing developers have broadened as well as deepened. 91% of respondents say obstacles remain within the current environment, up from 82% previously. High build and labour costs rank as the most significant concern overall, cited by 29%, followed by planning delays and uncertainty at 21%, and funding delays and uncertainty at 17%.
Looking ahead, developers highlighted greater political and economic certainty and stabilising construction costs as the factors most likely to improve conditions.
"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," said Jonathan Samuels, chief executive of Octane Capital (pictured).
"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."
