In property sales there are people who need to move and people who want to move. In the last few years, only those who have had to up sticks have been active.

Once conditions improve, those who want to find somewhere else to live return to the show homes too. That shift creates a positive market: it increases the customer base, keeps chains intact and reduces fall-throughs.

It does not require a revolution in economics to trigger that change – a further modest reduction in interest rates early next year could be enough to move us over the line.

I expect to see a noticeably stronger market in early 2026.”

On that basis, I expect to see a noticeably stronger market in early 2026.

If borrowing costs ease following the Bank of England Monetary Policy Committee decision on 18 December, and inflation remains under control, discretionary movers will come back into the market.

Once they return, chains will lengthen, stock will turn more quickly and the market will feel less fragile. That is the moment when policy choices made in 2024 and 2025 will be tested, because the real question is not whether demand will return, but whether supply can keep pace.

Short term

Today there are enough new homes to meet demand in many areas, but only for the short term.

Years of mixed messages about housing, together with layer upon layer of regulation, have slowed development activity. Costs have risen sharply, and so too have requirements such as biodiversity net gain, affordable housing and building safety regulations.

The cumulative effect of regulation has reduced what developers can afford to pay for land.

Shortage

A landowner with a strong income from their core business will not sell for half of what they were led to expect. If that gap is not closed, sites will remain in agricultural/commercial use, and a shortage of development land with planning consent will stall the market.

The recent action taken in London shows that the Government understands the problem.

Once put into practice, reduced affordable housing requirements, lower Community Infrastructure Levy in some locations and more flexible design standards, will begin to unlock stalled schemes.

A similar, carefully calibrated approach will be needed elsewhere if ministers are serious about achieving 1.5 million homes this Parliament.

Realistic

It is not only the level of affordable housing that matters, but also the way it is funded.

Registered providers are finding it harder to commit to new Section 106 homes due to a lack of funds, and developers are increasingly left with affordable units that have no obvious buyer.

We need a realistic conversation about how S106 homes are priced and supported.

The one thing the property market does not need in 2026 is further legislation.”

At the same time, many households are hesitating because of the wider cost of living. If the Government wants 2026 to be the year that first-time buyers return in force, it will need to address this problem.

A refreshed Help to Buy style scheme or a time limited Stamp Duty holiday would certainly help.

The one thing the property market does not need in 2026 is further legislation.

Additional regulatory burdens would be a tipping point for many schemes. Policy now needs to focus on removing friction in the system, not adding to it.

New towns will be part of the long-term answer if we are to deliver more than 400,000 homes a year, but they will not help meet housing targets in the remaining 3 ½ years of this Parliament.

Extreme examples

We should also watch the transition from leasehold to commonhold. From my experience, the existing leasehold system usually works well for flat owners, and the more extreme examples of poor practice are not the norm.

Commonhold may look attractive in theory, but shared responsibility for major works is difficult to manage in practice. You cannot mend a roof by committee.

One action

If I had to pick one action for 2026, it would be a genuine reduction in the regulatory burden across planning and development, combined with targeted support for first-time buyers.

That means following through on promises to cut red tape at every stage of the planning cycle, revisiting the impact of requirements on viability and giving households a reason to believe that now is the right time to move.

Do that, and when demand moves from need to want, the new homes sector will be ready to respond rather than being left struggling to catch up.

Tim Foreman is Managing Director of Land and New Homes at LRG

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