New figures from planning and property sector analysts have revealed a mixed picture for the UK’s built environment market, with housing planning applications climbing to their strongest level since 2022 while commercial property investment activity slowed sharply during the opening months of 2026.
Data released by TerraQuest shows that residential development activity across England outside London has remained resilient despite ongoing viability challenges and economic uncertainty. Meanwhile, separate analysis from Real Estate:UK and CoStar Group highlights a notable cooling in overseas investment into UK commercial property following a record-breaking 2025.
According to TerraQuest’s latest planning application index, developers submitted applications for 71,028 housing units during the first quarter of 2026, making it the strongest opening quarter for housing applications since Q1 2022.
Affordable housing also recorded a particularly strong start to the year. The data revealed that 4,225 affordable homes were submitted through planning applications during the quarter, marking the highest start-of-year figure for affordable housing applications since the beginning of the decade.
The figures suggest that demand for new housing delivery remains relatively strong across much of England, despite mounting challenges facing developers and contractors.
However, the picture in London proved less positive. Housing unit submissions within the capital fell to 9,346 during the first quarter, representing the weakest quarterly performance since Q2 2023 and a significant decline compared with the same period last year.
Industry analysts suggest the divergence between planning activity and actual delivery increasingly reflects wider structural challenges within the planning and construction sectors rather than a lack of development appetite.
TerraQuest noted that post-approval delays, infrastructure limitations, rising construction costs and ongoing inflationary pressures continue to hinder schemes progressing beyond the planning stage. Broader economic uncertainty and site viability concerns are also affecting developers’ ability to move projects into construction.
Alongside the housing market data, the latest investment figures from Real Estate:UK and CoStar Group point to a more cautious commercial property investment environment during the opening quarter of the year.
Total UK commercial property investment reached £9.7bn in Q1 2026, almost 40% below the five-year average for the first quarter. Overseas capital accounted for £3.6bn of activity, with inflows from the United States easing considerably following exceptionally strong levels recorded throughout 2025.
Analysts suggest the weaker US dollar, elevated financing costs and ongoing geopolitical and economic uncertainty have all contributed to a more cautious approach from international investors towards UK assets.
Despite the overall slowdown, the office sector emerged as one of the more resilient asset classes during the quarter. Offices attracted £2.9bn of investment, accounting for around 30% of all commercial property activity, with much of the investment concentrated in London and a select number of major regional cities.
Industrial property, by contrast, recorded its weakest quarterly performance in almost six years, reflecting softer investor sentiment following several years of exceptionally strong logistics and warehouse demand. Retail investment activity also remained subdued as investors continued to prioritise more defensive or operationally driven sectors.
The softer first quarter follows a particularly strong 2025 for UK commercial property investment. Overseas investment volumes rose by 33% year-on-year to reach £27.2bn last year, making it the fourth strongest year on record and accounting for a record 56% share of all UK commercial property investment activity.
Healthcare proved to be one of the standout sectors throughout 2025, driven by long-term demographic demand and continued investor appetite for operational real estate assets capable of generating resilient income streams.
Build-to-rent also continued its strong upward trajectory, attracting a record £5.6bn of investment as international investors increasingly targeted professionally managed rental housing schemes across major UK cities.
Investor appetite also remained strong for operational real estate sectors including data centres, healthcare, life sciences and professionally managed residential assets, where long-term structural demand drivers continue to support growth despite wider market uncertainty.
The latest figures underline how the UK property and development landscape remains increasingly divided between resilient long-term growth sectors and areas facing short-term economic and viability pressures. While planning activity suggests developers remain committed to delivering new housing, ongoing delivery constraints and a more cautious investment environment continue to shape the pace and direction of the market in 2026.
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