The latest Construction Index from Glenigan reports a 17% decline in work starting on-site in Q1 2026, remaining 18% below 2025 levels.
The Index focuses on the three months to the end of March 2026, covering all underlying projects, with a total value of £100million or less, with all figures seasonally adjusted.
April’s Index highlights the serious challenges facing the UK construction sector, with the industry remaining in the tight grip of decline.
Glenigan says that recent socioeconomic events and foreign policy decisions have resulted in a severely disrupted supply chain and unprecedented market volatility, resulting in stalled activity, flattened margins and dented profits.
While the Iran War, which started at the end of February, has resulted in some instant negative effects, the expected aftershock of the closure of the Strait of Hormuz and increasing threats posed to the Suez Canal and Red Sea, mean that disruption is predicted to continue through Q2 and Q3 2026.
As a result, new projects commencing in the coming months are expected to be impacted. This comes after work starting on site fell once again, particularly when seasonally adjusted, dropping by 17% compared to Q4 to finish almost a fifth (-18%) below 2025 levels.
Residential construction fell yet again, as international conflict, persisting confusion around planning policy and a weak economy continue to hinder development. Glenigan says that hesitant investors and apprehensive potential buyers are keeping their hands firmly in their pockets for the time being.
Residential project starts declined by 13% on the preceding three months and by almost a third (-30%) on 2025. Private housing construction starts declined by 9% against the preceding three months and by 34% against the previous year, while social housing starts were similarly depressed, dropping by roughly a quarter (-24%) against the preceding three months and by 16% against the previous year.
For non-residential, offices remained a strong outlier, posting impressive project-start increases compared to both the previous quarter and last year. However, these impressive figures were not nearly enough to outweigh overall disappointment in these verticals, with civils falling against both periods covered by the Index.
Glenigan’s Allan Wilen said: “Superficially, looks can be deceiving. A seasonal rise during the first quarter is masking a renewed weakening in project starts. All three main verticals: housing, non-residential buildings and civil engineering are considerably lower than a year ago and on the previous quarter on a seasonally adjusted basis.”
“The sector is fighting on all fronts, home and abroad. Particularly, the Iran War will depress activity further near-term as private developers and house purchasers delay investment decisions due to fears of higher than anticipated interest rates, rising material costs, spiralling energy costs and stalled economic growth. It will have a knock-on effect on the non-residential verticals which, although many have ring-fenced funding, will no doubt be putting activity on hold to ensure they don’t waste budgets whilst rates spike.”
According to Glenigan’s regional data, the performance picture was inconsistent. Once again, London was the stand out performer, experiencing a strong performance, rising 26% against the preceding three months to stand 69% up against the previous year. This was underpinned by a strong performance from the office sector, which helped drive growth in the region.
It was more of a mixed bag for some of the regions. Northern Ireland experienced a mixed performance, dipping 2% against the preceding three months to finish 37% up against the previous year. The North East performed similarly, dropping 27% against the preceding three months to stand 16% up compared to 2025 levels.
It was a less positive story for the remainder of the UK and, in particular, the South West where performance fell significantly, falling 47% against Q4 to stand 54% down against the previous year.
The West Midlands also experienced a poor period, declining by 37% against the preceding three months to finish 39% lower than last year’s figures.
Finally, the South East performed poorly, declining 22% against the preceding three months to stand 27% down against the previous year.
