Housing construction poised for substantial expansion – TNT

Glenigan has released its widely anticipated UK Construction Industry Forecast 2025-2027, predicting that housebuilding and other sectors will see a resurgence of activity over the next couple of years.

Private housing starts have already shown marked improvement during the first four months of 2025, bolstered by more favourable market conditions. While a brief retrenchment is anticipated in Q2, this is expected to be temporary. Encouragingly, the housing market is forecast to strengthen considerably during the latter half of 2025 and throughout 2026, driven by rising household incomes, reduced mortgage rates and improving economic conditions.

The chief catalyst for growth in this vertical registered at the start of the year, with the stamp duty increases (introduced in April) providing significant momentum to Q1 housing market activity as purchasers expedited completions ahead of the tax rise. The sector’s growth trajectory is expected to continue as consumer confidence strengthens in response to increasing real incomes and further interest rate reductions. Additionally, forthcoming planning reforms are projected to release additional development sites, providing further support to sector growth in the later stages of the forecast period.

Overall growth in the construction section is predicted to increase 3% in 2025, 10% in 2026, and 11% and 2027.

These figures come despite a “rocky start” to 2025 and a “very disappointing” 2024, the result of socio-political turmoil in the UK and abroad, the latest Glenigan report says.

The main driver for this upturn has been a strengthening in domestic demand, particularly consumer spending amid heightened unease in global markets.

With the government having “found its feet” over the Spring, and more certainty starting to return to the markets, the prospects of renewed growth are reflected in the recent uptick in underlying construction starts over the previous quarter, which is anticipated to remain stable following the various building and upgrading commitments made by the Chancellor of the Exchequer last week.

The private sector is also playing a key role in this momentum boost, with residential starts rising significantly over the last four months. The report predicts that this is set to increase as rising household incomes and lower interest rates cause a lift housing market activity, reaching an +18% performance high by 2027.

Glenigan’s’ Allan Wilen commented: “It’s been a frustrating few years for the construction sector, just as there seems to be light at the end of the tunnel a new set of headwinds seems to buffer it, leading to prolonged stagnation. Yet recent events indicate we’re finally turning a corner. Consumer spending power and confidence are improving. This has supported an upturn in housing market activity and is expected to help drive private housebuilding over the next three years.

“The promise of some refreshingly strategic spending from the Government will certainly send a positive signal to contractors and subcontractors nationwide with spending earmarked for a number of big and small projects presenting plenty of opportunities.

“We should also not underestimate the mercurial nature of geopolitical events. Whilst the US tariffs have caused turmoil across the world, the UK’s relatively lighter treatment may help to renew private investors enthusiasm to put their money in our built environment. Of course, trade negotiations are ongoing and volatile, so construction businesses need to approach predicted growth with an element of caution. However, as it currently stands, the signs are positive and the industry can look forward to an extended period of increased activity.”