Glenigan’s latest Construction Index, powered by Hubexo (Glenigan), shows that private housing project starts have increased by almost a third compared to the previous quarter and by 25% year-on-year.
The Index focuses on the three months to the end of January 2025, covering all underlying projects, with a total value of £100million or less, with all figures seasonally adjusted.
Commenting on the findings, Glenigan’s economic director, Allan Wilen, said: “Momentum is shifting in the UK housing market. After a sharp drop in transactions and prices, consumer confidence is returning, and mortgage applications surged in 2024 – indicating buyers are re-entering the market even as rates hold steady. Housebuilders are responding to the turnaround in market conditions.”
“We’re forecasting private housing starts to rise by 13% and social housing by 11% in 2025, meaning construction activity is set to continue its revival. A £1billion investment in housing improvements and Budget support for SMEs and Build-to-Rent will further broaden development opportunities, setting the stage for sustained growth in the sector.”
Social housing also managed an increase on the previous three-month period, with work starting on-site increasing 1% despite standing 26% down on the year before.
Glenigan says that this represents a consensus amongst Britain’s housebuilders to get shovels in the ground, bolstered by the government’s commitment to fresh investment in the built environment. This is having an immediate positive effect on private sector confidence and accelerating project pipelines. Plans to cut red tape in the planning process should also help to unlock development, ensuring housing projects move from approval to construction more quickly.
In terms of construction starts across all sectors, the North East was the strongest-performing region in the UK, with project starts increasing 82% against the preceding quarter, to stand 1% up on this time last year.
The outlook for the East Midlands was also optimistic, with starts up 56% on the preceding three months to stand 8% up on the previous year.
Several other regions of the UK experienced growth in project starts against the previous quarter, including Yorkshire & the Humber (+36%) and the West Midlands (+18%).
Elsewhere, performance was subdued. Wales experienced a 25% decrease against the preceding three months and remained 16% down year-on-year. London also saw a decrease, with the value of project starts falling 7% compared to the previous quarter, and 41% down year-on-year.
Allan concludes: “Many will be disappointed the year hasn’t got off to a stronger start, but I would suggest a degree of optimism is in order. We are starting to see some of the economic challenges gradually easing and this is being evidenced through pockets of growth in housing starts and a handful of other non-residential verticals.”
“An improved economic outlook, combined with the promised government investment in large-scale infrastructure projects, will hopefully provide a much-needed shot in the arm to further boost performance in Q2 and Q3.”
