Glenigan, the construction industry insight and intelligence provider, has released its latest UK Construction Industry Forecast for 2025-2026.
The key takeaway from the November Forecast, which focuses on the two years 2025-2026, is construction project starts will continue to strengthen as the UK economic growth gathers momentum.
Renewed construction growth is forecast for 2025 (+8%) and 2026 (+10%) as the prospect of a recovering market lifts consumer and business confidence, boosting the industry.
The private housing market activity has shown signs of stabilising during the second half of 2024 due to a brighter economic outlook and improvement in household incomes.
Recovery is forecast for 2025 and 2026. Project starts have stabilised since the election, and private sector work has gradually risen during the second half of 2024.
Although Glenigan predicts only a modest 1% performance dip for 2024 by the year’s end, comparatively it’s a significant improvement against the 7% drop in 2023.
Firm development pipelines are pulling through, with main contract awards standing 7% up on 2023 figures, supporting a renewed rise in industrial and office starts as investor confidence improves.
From Glenigan’s analysis, returning market optimism and purchasing appetite may prompt buyers to take advantage of reasonable house prices, helping to support further recovery during 2025 (+13%) and 2026 (+15%) as housebuilders respond to improved consumer confidence and strengthening property transactions.
While housing approvals have been on a downward trend for most of 2024, the government’s planning reforms are anticipated to reverse this trend, paving the way for an uptick in new approvals and housing developments over the forecast period.
Additionally, the Budget’s £3billion support package for SMEs and the Build-to-Rent sector should provide a boost to new and smaller developers, further lifting the overall housing supply.
Commenting on the Forecast, Glenigan’s economic director, Allan Wilen, said: “The construction sector is on track for growth from 2025, fuelled by a combination of improved consumer confidence, increased household spending, and strategic fiscal changes announced in the recent Budget. These factors will drive demand in private housebuilding, as potential buyers will feel they have greater purchasing power. In turn, this will be passed onto property developers and investors, prompting a likely uptick in supply.”
