North rises, south falls
The Rightmove House Price Index for May 2026 shows average asking prices rising 1.2% in May to £378,304, though prices remain 0.3% below May 2025. Sales agreed are holding up, just 4% below last year when mortgage rates were significantly lower. Affordability is driving a clear north-south divide, with the North East and North West continuing to see price growth while London is down 2.4% and the South East down 1.6%.
Earnings growth evaporates in real terms
Against that backdrop, the earnings picture offers little reassurance. The ONS Average Weekly Earnings bulletin, released 19 May, recorded nominal regular pay growth of 3.4%, the lowest rate since 2020 and continuing a downward trend. Adjusted for inflation, real regular pay growth was just 0.1%. The earnings growth that had been partially offsetting mortgage cost pressures is narrowing.
Construction feels the squeeze first
The construction sector stands out as the weakest point in the earnings picture, the only sector where regular earnings actually fell year on year. The workforce most directly tied to housing delivery is seeing real earnings contract at the same moment build cost pressures are rising across the sector. Conditions are tightening from both directions. Rising mortgage costs are compressing affordability from one direction, whilst stagnating real wages are compressing it from the other.
Prime space keeps pricing power
British Land’s full-year results, published on 20 May, suggest demand for high-quality operational real estate remains resilient despite a softer macro backdrop. Like-for-like net rental growth reached 6% in the year to 31 March, with campus offices delivering 12% growth and retail park occupancy reaching 99%. The group leased 3.8 million square feet during the year at rents 7.2% ahead of estimated rental value, while underlying profit rose 5% to £294m. The results reinforce a theme increasingly visible across the market: where supply remains constrained and occupiers continue to prioritise quality, prime assets retain pricing power.
Single-family housing institutionalises
Institutional capital is also continuing to move deeper into UK residential rental markets. CBRE Investment Management and Moda Living announced the launch of a UK single-family housing strategy backed by £400m of initial capital, with ambitions to scale to £2bn over time. The strategy will target the development and operation of purpose-built houses for rent, drawing on a pipeline of more than 25,000 plots controlled by Moda’s parent Caddick Group. The announcement marks a significant step in the institutionalisation of single-family rental housing in the UK.
US capital exits UK leisure
Sun Communities, a US-listed REIT, announced on 21 May the sale of its UK Park Holidays leisure portfolio to funds affiliated with Aermont Capital at an enterprise value of £768 million. The transaction will see Sun exit the UK market entirely to focus on its core North American portfolio, with European private equity stepping in as the buyer. The transaction remains subject to FCA regulatory approval and is expected to complete in the second half of 2026.
Income REIT delivers record rental growth
LondonMetric reported net rental income up 16.6% to £455.3m for the year to 31 March 2026, with EPRA earnings rising 13.9% to £305.3m. The group increased its logistics weighting to 53% of the portfolio following the Urban Logistics REIT acquisition, marking eleven consecutive years of dividend progression.
The development landscape under the microscope
As the mid-year point approaches, AGM trading updates from four of the UK’s leading housebuilders are beginning to paint a clearer picture of the national development landscape. In this edition of The Long View, we examine the fortunes of four key players, the strengths and vulnerabilities their updates reveal, and the questions their respective chief executives may seek to address at upcoming interim results.
The development backdrop is difficult. Rising input costs, fuel surcharges, elevated financing costs and geopolitical uncertainty have created an atmosphere of caution across the sector. Capital, generally speaking, continues to favour existing income-generating assets over new development risk. Land acquisition has slowed and, in some cases, developers have tightened spending on existing sites to prioritise short-term cash generation. A sector dependent on cost stability, steady demand and political certainty now faces pressure across all three. But the story is not uniform across the market.
Persimmon: resilience through model and discipline
Persimmon’s AGM trading update, published on 30 April, told a relatively sanguine story. Net private sales per outlet per week rose 3% year on year to 0.67, private forward sales increased 7% to £1.80bn, and average selling prices were up 5% compared with the same point last year. Full-year profit guidance was maintained in line with consensus at £462m.
Part of Persimmon’s resilience is structural. The business is vertically integrated, manufacturing some of its own material, including its own timber frame housing systems through Space4. Whilst competitors are absorbing surcharges from external suppliers as input costs rise, Persimmon has greater ability to manage those pressures internally. That advantage is meaningful in a challenging macro-economic environment.
The business also operates across three brands, Persimmon Homes, Charles Church and Westbury Partnerships, serving private, premium and partnership markets respectively. That diversification reduces reliance on any single market segment. Financially, Persimmon has invested in balance sheet discipline over recent years. That discipline is paying off now. With more than half of its private homes for 2026 already in the order book, the business enters the second half on a relatively strong footing.
As with all of the major developers, there are risks, but they are relatively bounded. Reservations are not legally binding until exchange, and some conversion risk remains. Further stresses in mortgage affordability would still pressure completions. But as things stand, Persimmon’s vertically integrated, diversified and cash-disciplined model is demonstrating a degree of resilience in a challenging macro-economic environment.
Taylor Wimpey: managing carefully in a difficult environment
Taylor Wimpey’s AGM update, published on 28 April, reflected a more cautious picture. Net private sales per outlet per week fell slightly to 0.74 from 0.77 a year earlier, the order book declined from £2.34bn to £2.23bn, and pricing within the order book was approximately 1% lower year on year. The dividend was cut from 4.66p to 2.95p per share, a significant signal that the board is prioritising balance sheet resilience over shareholder returns.
The model is relevant here. Taylor Wimpey operates as a traditional volume housebuilder, selling primarily to private buyers through over twenty regional businesses. In the current environment, that exposure to open market conditions is creating additional headwinds.
Geographic factors add pressure. The company explicitly highlighted pricing weakness in the South of England, where affordability constraints are most acute. A business that performs strongly when London and the South are buoyant now finds itself disproportionately exposed as those markets soften.
Management’s response has been disciplined. Land buying has slowed sharply, with around 1,000 plots approved year to date compared with 1,700 at the same stage last year. That reduction in pipeline signals a management team preparing for a slower market. Taylor Wimpey is managing carefully, but it is managing through a difficult market environment.
Vistry: partnerships model faces its first real test
The Vistry model was designed to insulate the business from exactly this kind of open-market volatility by anchoring revenue to pre-agreed affordable housing delivery. It now finds itself managing a few different pressures simultaneously.
Transaction activity with housing association partners has slowed as the industry transitions between government affordable housing programmes. New grant notifications are not expected until the third quarter. The business has responded by slowing construction on open-market sites, as well as increasing incentives and discounts to clear existing stock, and pausing its share buyback programme. The firm’s full-year outcome is likely to depend largely on whether partner revenues recover in the second half.
The new chief executive, Adam Daniels, is conducting an operational review with findings due at the September interims. Daniels may use the review as an opportunity to address how the business manages the gap between government funding cycles, whether potentially through greater retained open-market capability, or revised cash management structures.
Crest Nicholson: awaiting clarity
Crest Nicholson is another of the traditional housebuilders managing a challenging environment. A trading update published on 21 April revised full-year unit guidance to 1,400-1,500 homes from 1,550-1,700, with anticipated land sales revenue cut to around £40m from £75-100m. EBIT for the financial year is now expected at £5-15m, with year-end net debt of £100-120m.
The Group confirmed it had entered discussions with lenders regarding a temporary covenant relaxation. A further announcement on 19 May confirmed that half-year results would be delayed until 16 July to allow those discussions to conclude, with management describing progress as constructive.
Crest’s established presence across the South, Midlands, South-West and Eastern regions provides a platform from which the business will be looking to rebuild balance sheet strength once lender discussions conclude. The July results will be the next significant moment.
The unresolved questions
Interim results will provide the next substantive update for all four businesses. Barratt’s AGM trading update, expected in July, should also provide further clarity on conditions across the wider sector. For Persimmon, the market will be interested in whether reservations are continuing to translate into completions as expected, and if demand is holding up amidst macro-economic uncertainty.
For Taylor Wimpey, investors are likely to be interested in the outlook for the South of England business and whether the reduction in land approvals signals a more sustained pullback from growth ambitions.
For Vistry, the market will be interested in the findings of the operational review due in September. The review may provide an opportunity to set out how the partnerships model could potentially evolve, and how the business plans to manage the relationship between open-market conditions and partner revenues through future funding cycles.
For Crest Nicholson, the immediate priority remains the covenant reset. Once resolved, the July results may start to provide a clearer picture of the underlying health of the business and its path back toward full recovery.
Planning protections tighten around infrastructure
The Chancellor announced proposals on 20 May to reduce the exposure of nationally significant projects to judicial review. Under the proposed reforms, Parliament would be able to designate certain clean energy schemes as being of “Critical National Importance”, limiting legal challenge to human rights grounds only.
For other nationally significant infrastructure projects, the government proposes introducing a fixed challenge window, after which planning consent could be amended to address legitimate concerns before being finalised. The reforms form part of a broader attempt to reduce delivery delays across infrastructure and energy projects, particularly where legal challenge is perceived to have become a constraint on execution.
Social housing reforms move forward
The Social Housing Bill was formally introduced to Parliament on 14 May, alongside wider reforms aimed at reshaping the long-term economics of the social housing sector. The Bill extends Right to Buy eligibility periods from three years to ten, while exempting newly built social homes from the scheme for 35 years. Additional protections for tenants experiencing domestic abuse are also included.
Alongside the legislation, the government confirmed the launch of a wider review into social housing allocation. The review will examine how existing stock is allocated and managed, with ministers signalling a greater focus on reducing voids and improving utilisation of existing stock as the government seeks to better direct existing supply toward those most in need.
The Early Viewer provides news, analysis and commentary for informational purposes only. It does not constitute investment, financial or legal advice and does not recommend the buying, selling or holding of any security or investment. Analysis reflects the author’s views at the time of publication and is not tailored to any reader’s individual circumstances. Readers should seek independent professional advice before making investment decisions.