Barclays Business Prosperity Index Reveals Strong Confidence and Rising Investment Across UK Housebuilding Sector

Barclays Business Prosperity Index Reveals Strong Confidence and Rising Investment Across UK Housebuilding Sector

(IN BRIEF) The latest Barclays Business Prosperity Index Housebuilding report shows that 83 per cent of businesses in housebuilding and its supply chains remain confident about the year ahead, despite affordability pressures, regulatory challenges, and financial caution. Drawing on data from around 70,000 businesses alongside industry and consumer surveys, the report highlights strengthening activity at the start of the development pipeline, sustained demand for new-build homes, and a planned 38 per cent increase in investment over the next 12 months. Firms are increasingly focusing on skills, innovation, and AI, while also preparing for the Future Homes Standard, though many remain concerned about readiness. New-build homes are particularly popular among Gen Z buyers, yet rising costs and regulatory requirements continue to pose barriers for developers. Barclays’ senior real estate leaders emphasized both the resilience of the sector and the importance of supporting smaller housebuilders through access to finance via the Business Prosperity Fund.

(PRESS RELEASE) LONDON, 2-Feb-2026 — /EuropaWire/ — The latest Barclays Business Prosperity Index Housebuilding report indicates that confidence across the housebuilding sector and its wider supply chain remains robust, even in the face of affordability pressures, regulatory complexity, and cautious financial behaviour. According to the findings, 83 per cent of businesses operating in housebuilding and related industries expect a positive outlook for the year ahead, signalling resilience and a willingness to invest despite ongoing challenges.

The report draws on anonymised transactional data from approximately 70,000 Barclays business clients, alongside insights gathered from 500 industry leaders and a survey of 2,000 UK consumers. Together, this evidence points to renewed momentum at the early stages of the development pipeline, sustained demand for new-build homes, and a notable increase in planned investment across the sector.

Analysis of financial trends shows that architects and quantity surveyors have experienced rising incoming cashflows between Q3 2024 and Q3 2025, suggesting stronger activity in the initial phases of construction and planning. At the same time, smaller firms have adopted a more cautious stance by reducing borrowing while building up savings buffers, whereas a smaller number of larger companies have increased borrowing and drawn down savings, potentially to fund expansion or new projects.

Looking ahead, business leaders anticipate a significant uplift in investment over the next 12 months, with plans to increase spending by around 38 per cent overall. Priorities include marketing, the purchase of new equipment, and higher levels of investment in pay and recruitment to attract and retain skilled workers.

The report also highlights growing interest in innovation, skills development, and digital transformation. Four in ten firms facing skills shortages are investing in modern construction methods to reduce reliance on manual labour, while similar proportions are expanding early-career training programmes and focusing on upskilling their existing workforce.

Interest in artificial intelligence is also rising, with average intended AI investment reaching more than £440,000. Companies are increasingly exploring AI-assisted design and planning tools, energy-efficient materials, business management automation, and building information modelling to improve productivity and sustainability. Investment levels vary across trades, with electronics firms signalling the highest planned AI spend, while plumbing, carpentry, and painting and decorating firms expect more modest but still meaningful allocations.

Compliance with the Government’s Future Homes Standard has emerged as a top priority for nearly all firms, yet a large majority remain concerned about their readiness. Businesses identified installing low-carbon heating systems, adapting to the new Home Energy Model, and meeting updated ventilation standards as key areas where additional support is needed. Despite these concerns, around 30 per cent of companies are already investing in specialist equipment, training, and technology to improve compliance.

From a consumer perspective, new-build homes are particularly popular among younger buyers. Six in ten Gen Z homeowners currently live in a new-build property, compared with just one in four across all age groups. Nearly half of first-time buyers in the past year opted for a new-build home, driven by factors such as location, favourable mortgage terms, and energy efficiency. However, affordability remains a concern, with many young prospective buyers citing mortgage rates as a more significant barrier than house prices themselves.

Housebuilders continue to face obstacles, with high construction costs, inflation, raw material prices, and regulatory requirements linked to the Future Homes Standard identified as the main barriers to development.

Looking forward, developers expect consumer demand for customisation and improved digital infrastructure to shape their approach to new projects. However, consumer preferences suggest a stronger focus on access to green spaces, proximity to transport links, and nearby parks or countryside, with digital connectivity and customisation playing a comparatively smaller role in purchase decisions.

Jason Constable, Head of Real Estate at Barclays Corporate Banking, described the level of innovation across the sector as encouraging, noting that investments in technology, skills, and modern construction methods are helping to improve productivity. He added that strong demand for new-build homes presents a clear opportunity for growth, despite ongoing affordability and planning challenges.

John Ainsworth, Head of Real Estate at Barclays Business Banking, highlighted that smaller housebuilders remain cautious but resilient, with many actively addressing skills shortages and regulatory requirements. He emphasized the importance of supporting regional SMEs to help meet national housing targets and reaffirmed Barclays’ commitment to providing financing through its Business Prosperity Fund.

The Barclays Business Prosperity Fund is available to both new and existing Business Banking and Corporate Banking clients across the UK, offering lending and refinancing options for eligible projects, subject to terms and conditions. Businesses can access the full report and additional information via Barclays’ Business Prosperity website.

About Barclays

Our vision is to be the UK-centred leader in global finance.  We are a diversified bank with comprehensive UK consumer, corporate and wealth and private banking franchises, a leading investment bank and a strong, specialist US consumer bank. Through these five divisions, we are working together for a better financial future for our customers, clients and communities.

For further information about Barclays, please visit our website home.barclays

Media Contact:

email: harry.neicho@barclays.com
Tel: 07828 952 458

SOURCE: Barclays