By Jonathan Pearson, director of Residentially
A period of uncertainty weighed heavily over the housing sector in 2025, as housing associations, housebuilders and homebuyers waited for greater clarity from the June Spending Review and the Autumn Budget in November.
While 2026 is unlikely to be an easy year, many of the major unknowns that have held the sector back are beginning to come into focus. The demand for affordable homes remains strong, and the pressure to deliver has not diminished.
With momentum starting to build again, here are my five predictions for the year ahead.
The housing market will start moving again
Many buyers, sellers and investors delayed decisions while waiting for greater certainty last year, particularly ahead of the November Budget.
But putting life on hold is not sustainable and underlying demand from people upsizing, downsizing, starting families or relocating has not disappeared.
With interest rates beginning to fall and budget-related uncertainty easing, confidence is now starting to return. There are reports that housing sales expectations are at their highest since the end of 2024, the number of homes for sale are at an eight-year high and house prices have increased by as much as £10,000 in some places.
More agents and lenders are likely to report more activity in 2026 as a result, as this growing confidence builds gradually during the year.
Social and affordable housing will benefit from new certainty
Housing associations faced significant funding uncertainty throughout much of 2025, particularly in the first half of the year. That uncertainty has eased following the government’s £39bn funding commitment, notably structured as a 10-year programme rather than a one-off announcement.
Further clarity is expected in 2026 with the launch of Homes England’s National Housing Bank, backed by £16bn of funding and designed to unlock more than £53bn in private investment, alongside a long-awaited decision on a rent convergence policy.
Even the those who argue that the Social and Affordable Homes Programmes’ figures are not materially different from previous settlements must acknowledge the renewed and sustained political focus on affordable housing. Figures from Hansard show ‘planning reform’ was mentioned a record 520 times in Parliament in 2025, and affordable housing has also firmly entered the mainstream political agenda.
This combination of long-term funding certainty and political focus should give housing associations and developers the confidence to plan ahead, secure land and commit capital more decisively in 2026.
Housebuilding will start to recover
Rising costs, planning delays and the widespread uncertainty facing the sector significantly slowed housebuilding last year.
The number of planning applications fell to a 20-year low last year, there was a 72% drop in the number of new properties beginning construction in London and Britain’s second-largest housebuilder Vistry Group has reported delivering nearly 10% fewer homes.
However, 2026 should mark a turning point. Borrowing costs are expected to ease, while the government’s commitment to boost planning capacity and the introduction of the new National Planning Policy Framework should begin to remove long-standing bottlenecks. In London, the rollback of affordable housing thresholds will also make more developments there financially viable.
As confidence returns, more buyers may also be willing to spend, and stronger partnerships between housebuilders and housing associations are likely to emerge.
While housing delivery will not recover overnight, with building safety obligations and ongoing financial pressures still encouraging caution, these incremental improvements should help unlock some stalled schemes and gradually lift the overall supply.
Shared ownership is due a resurgence
Some expected a new Help to Buy scheme to be announced in last year’s Budget, while others argued it would simply distort the market by offering artificially cheap finance.
Its absence has instead brought shared ownership back into focus, particularly for housing associations that can deliver the model at scale through the existing affordable housing system.
Despite lingering stigma and a lack of understanding that continues to deter some buyers, shared ownership addresses a genuine and growing affordability gap. It offers a viable route for those who can afford more than renting but are priced out of full ownership, and younger generations are increasingly viewing it pragmatically as a first step onto the property ladder.
When well designed and properly managed, the model is likely to become even more relevant as the wider housing market recovers, especially in areas where the gap between what homes cost and a lot of people can afford is much bigger.
For-profit housing providers will continue to grow
Large institutional investors are increasingly seeking opportunities with a clear social purpose, and for-profit affordable housing helps meet that demand. New entrants are likely in 2026, activity is set to increase, and the sector will continue to professionalise.
Importantly, this growth does not come at the expense of not-for-profit providers. While some for-profit operators were once criticised for aggressively bidding on schemes to gain a foothold in the market, many have since adapted their approaches. Today, the market is large enough to accommodate both models, reflecting their differing risk appetites, funding structures and asset management strategies.
In fact, many for-profit providers now pursue joint ventures with traditional housing associations to help navigate shared market challenges.
While the sector is unlikely to dominate affordable housing delivery in the near term, it will continue to expand steadily, driven by that sustained investor demand for socially responsible and impact-led investment.
