Construction boom on the horizon, predicts market expert

Glenigan’s UK Construction Industry Forecast 2025-2026 forecasts an eight per cent growth in construction output in 2025 followed by a 10 per cent increase in 2026, compared to –1 per cent in 2024.

This translates to £74.3 billion in the value of underlying project-starts in 2025 and £81.9 billion in 2026 with key drivers of growth coming from gradual recovery in private housing starts during 2025 (13 per cent) and 2026 (15 per cent) as housing affordability.

Glenigan claimed project starts are expected to strengthen as UK economic growth gathers pace and public investment is projected to rise in the second half of the forecast period.

The market expert attributed the optimistic outlook to the General Election reducing political uncertainty, creating a more favourable environment for investment.

Glenigan also claimed project starts having stabilised in the second half of 2024 as confidence among private sector investors and consumers has improved, but public sector projects are disrupted over the political transition period.

The largest sectors of growth over the next two years according to Glenigan are, offices in 2025 (18 per cent) and private housing in 2026 (15 per cent).

This follows, an overall construction starts in 2023 seven per cent decline due to weak economic activity and high with private housing seeing a 10 per cent decrease that year.

Social housing, meanwhile, will see sustained 11 per cent growth in 2025 and 2026 following a 15 per cent decrease in 2023 and 2024.

Elsewhere, Glenigan predicts civil engineering will see a modest five per cent increase in 2025 despite 26 per cent growth in 2024, while retail will only grow one per cent compared to the 14 per cent growth this year.

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 are set to drive activity in consumer-related verticals such as private housing, retail, and hotel & leisure.

“The Budget’s adjustments to fiscal rules, allowing for higher levels of capital investment, will also unlock significant public sector and infrastructure projects, providing a much-needed boost to government-funded initiatives over the next two years.”