This is from the second quarterly SME developer sentiment survey, carried out by the Home Builders Federation (HBF) in partnership with Quantum Development Finance.

Over nine in 10 of SME developers said the Iran conflict had made their business outlook for the next 12 months worse than expected, with just 1% disagreeing.

The impact on confidence is reflected across all key housing delivery indicators, with nearly half (49%) of SME developers expecting to reduce land purchasing activity over the next three months, compared with just 18% who expect to increase it, representing a significant decline from the first quarter.

The outlook for the housing market in general has deteriorated sharply, with three-quarters of SME developers now holding a negative view of market conditions over the next three months, while just 4% report a positive outlook. This compares with 37% reporting a negative outlook and 28% a positive outlook in the previous survey.

Three-quarters of respondents identified development viability as one of the top three barriers limiting delivery, up from 57% in the first quarter. Planning delays remain a major obstacle, cited by 74% of respondents, while concerns over the cost and availability of materials increased sharply, rising from 10% to 30%.

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Almost all respondents (99%) said government action to improve viability would make them more likely to bring forward new sites, including 83% who said it would make them very likely to do so, while 87% said additional support for first-time buyers would increase their likelihood of starting new sites. It is the first time in 60 years that there is no government support in place for buyers.

“While we welcome Government reforms to the planning system, if we are to increase housing supply broader interventions are urgently required,” said Neil Jefferson, CEO at the HBF.

“With a change in Prime Ministerial leadership on the horizon, there is a clear opportunity to reverse these concerning trends and unlock the full potential of smaller builders to help deliver the homes the country needs.”

Richard Hemmings, managing director at Quantum Development Finance, added: “What remains abundantly clear is that more needs to be done to support demand, alongside action on planning and, crucially, viability, if SME developers are to be encouraged to push forward with new schemes. 

“If improved demand-side sentiment coincides with the intervention needed to unlock supply, SMEs may finally get the chance to deliver the quality housing this country so desperately needs.”