TerraQuest’s planning application index tracks applications across England, outside of London. It recorded 71,028 housing unit submissions, making it the strongest opening quarter for new housing applications since Q1 2022. Affordable housing applications recorded the highest number of affordable homes applied for at the start of any year (4,225 units) since the beginning of the decade.
While housing submissions remain resilient across much of England, London experienced a more difficult start to the year. At 9,346, housing unit submissions in the capital fell to their lowest level since Q2 2023 and were significantly down on the same quarter last year.
The steady levels of new homes being applied for suggests, TerraQuest says, the disconnect between applications and delivery can be increasingly linked to post-application planning delays as well as site viability pressures. Rising construction costs, inflationary pressures, infrastructure constraints and wider economic uncertainty continue to impact the ability of developments to progress beyond approval.
On the commercial side, Real Estate:UK and CoStar Group, found that total UK commercial property investment reached £9.7 billion in Q1 2026, almost 40% below the five-year first-quarter average.
Overseas capital accounted for £3.6 billion of investment in Q1, with inflows from the US easing significantly following a record year in 2025. The slowdown suggests that the weaker dollar may already be affecting the relative attractiveness of UK assets for overseas buyers, with elevated financing costs and wider global uncertainty also contributing to a more cautious investment environment.
Despite the weaker overall quarter, offices emerged as a relative bright spot. The sector attracted £2.9bn of investment in Q1 2026, accounting for 30% of total volumes, with activity concentrated in London and a small number of major regional cities. By contrast, industrial investment recorded its weakest quarterly performance in nearly six years, while retail activity remained subdued.
The subdued first quarter follows a strong 2025, with foreign inflows rising 33% year-on-year to £27.2 billion, the fourth strongest year on record, and accounting for a record 56% share of all UK commercial property investment activity.
In terms of asset classes, healthcare was the standout sector in 2025, reflecting strong investor conviction in operational real estate underpinned by long-term demographic demand. Build-to-rent investment also reached a record £5.6 billion as overseas investors continued to target professionally managed rental housing, while office investment recovered modestly amid improving sentiment towards prime assets in London and key regional cities. At the same time, multi-region portfolio transactions rose sharply, highlighting growing investor preference for scale and defensive income streams across sectors including healthcare, logistics and living.
The report highlights continued investor demand for operational real estate sectors such as healthcare, build-to-rent housing, data centres and life sciences, where long-term structural demand continues to support investment activity.
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