Barclays’ anonymised client data from around 70,000 UK businesses, combined with research from 500 industry leaders and 2,000 consumers, also shows strengthening activity at the start of the development pipeline, sustained buyer demand for new-build homes and a major uplift in planned investment.

The index found 40% businesses with skills shortages are investing in new construction methods to reduce manual labour, alongside 39% of businesses developing early career schemes and 36% who are focusing on training and upskilling.

Barclays also reveals that nearly all firms (98%) say aligning with the Government’s Future Homes Standard is a priority for the next 12 months, yet 82% express concern about their readiness.

Elsewhere, a quarter of homeowners report they live in a new-build property. This rises amongst first-time buyers, with 47% of those who bought their first home in the past year opting for a new build property.

New properties are most popular amongst Gen Z (61% of homeowners) with desirable location named as the top driver of purchases (28%).

A fifth (20%) cited favourable mortgage terms, such as higher loan-to-value ratio, and 17% also reported energy efficiency as a major reason for buying new.

This comes as young people report improving, but significant affordability challenges, as 61% of Gen Z hoping to buy a home in the next 12 months said that mortgage rates have a bigger impact on affordability than house prices themselves.

Despite strong buyer demand, the data shows there are still barriers to building.

A quarter (25%) of housebuilders report high construction costs as a major barrier, followed by rising inflation, cost of raw materials and meeting the requirements of the Future Homes Standard (all 19%).

Over the next 12 months, new-build property developers expect that consumers’ desire for customisation options, such as layout and finishes, to have the greatest impact on their approach (31%), followed by expectations for upgraded digital infrastructure including high speed broadband (27%).

However, when surveyed about which features most influence their choice of property, the top factor was access to gardens or communal green spaces (42%), followed by proximity to transport hubs (31%) and proximity to parks or countryside (30%).

Data reveals that just 17% named digital infrastructure as a key influence, and only 11% cited customisation.

Barclays Business Banking head of real estate John Ainsworth say: “Activity is generally subdued among SME housebuilders, with nearly three in 10 expecting no increase in output in the year ahead.”

“Yet SMEs are working hard to overcome skills shortages and regulatory alignment, with their resilience coming through strongly as they show confidence in their future success.”

“If the industry is to hit the Government’s target and build the much-needed homes of the future, it’s vital we continue to support the scaleup of smaller regional players. At Barclays we are committed to providing the external finance needed to scale via our Business Prosperity Fund.”