Construction Rebound Ahead: Industry Forecasts 2025-2026 Growth Surge

The UK construction sector is poised for a robust recovery in 2025 and 2026, with renewed momentum driven by economic growth and consumer confidence, according to Glenigan’s latest UK Construction Industry Forecast. The report, released this November, highlights an 8% increase in project-starts for 2025, followed by a further 10% rise in 2026, underscoring the industry’s resilience and adaptability.

Stabilisation and Growth in Private Housing

Private housing, a cornerstone of the construction sector, has shown signs of recovery in the latter half of 2024, buoyed by improving household incomes and a brighter economic outlook. Glenigan forecasts housing project starts to climb sharply, with anticipated growth of 13% in 2025 and an even more impressive 15% in 2026. This resurgence is expected to be fueled by a combination of stabilized house prices, increased consumer purchasing power, and strategic government reforms aimed at easing planning restrictions.

“The construction sector is on track for growth from 2025,” remarked Allan Wilen, Glenigan’s Economic Director. “Improved consumer confidence and increased household spending, alongside government fiscal changes, will drive demand for private housebuilding.”

Key Drivers of Recovery

The forecast outlines several factors contributing to the optimistic outlook:

• Economic Growth: A stabilizing economy post-2024 has boosted investor confidence, with main contract awards up 7% from 2023 levels.
• Government Support: A £3 billion funding package for SMEs and the build-to-rent sector is expected to invigorate smaller developers and enhance housing supply.
• Planning Reforms: Anticipated changes in planning regulations are likely to reverse the downward trend in housing approvals, paving the way for increased development.

Industrial and Office Sectors Rebound

The industrial and office construction segments are also set for growth, supported by strong development pipelines and improving market conditions. Investor confidence in these areas has been steadily rising, mirroring broader economic recovery trends.

Although 2024 saw a modest 1% decline in construction performance, this is a marked improvement from the sharp 7% contraction experienced in 2023. With a solid foundation for recovery, the industry is gearing up for a pivotal turnaround in the coming years.

As the sector braces for a period of expansion, optimism abounds, signaling brighter days ahead for the UK’s construction landscape.