The average size of development finance loan applications fell by 9% from Q1 to Q2, specialist packager, Thistle Finance has found.
But while average loan sizes were down in Q2, the number of applications submitted to Thistle Finance between April and June was up 15% on the first three months of the year.
This reflects not just increased development activity but the growing number of SME firms entering the market and taking on smaller projects.
Mark Dyason, managing director, Thistle Finance, said: “It’s happening slowly but we’re seeing a fundamental shift in the development sector.
“A long tail of smaller developers is emerging and gradually increasing its market share, empowered by the proliferation of specialist lenders offering better rates.
“The supply deficit represents a major commercial opportunity and regional start-up and SME developers, with lower level schemes, are highly active.
“The new wave of developers is increasingly aware that consumer demand is moving away from undifferentiated developments to more bespoke projects that better reflect the character of the areas they are in. The monopoly of the major developers is gradually being eroded.”
Applications for development projects outside London and the South East rose by 18% during April to June, with the South West and North West particularly active.