The latest Glenigan Construction Index, powered by Hubexo, paints a mixed picture of the UK construction sector as 2025 draws to a close. Covering the three months to the end of October, the November 2025 report provides a detailed view of underlying project activity valued at up to £100 million. Despite an ongoing decline in overall performance, there are early indications that the market may be edging towards stabilisation.
According to Glenigan’s data, construction starts fell by 8% in the three months to October, leaving activity 10% lower year-on-year. This decline continues a downward trajectory that has persisted throughout much of 2024 and 2025. However, while overall activity remains subdued, the rate of decline appears to have slowed. Some verticals, most notably commercial offices and civils, have delivered pockets of resilience, providing cautious optimism as the industry awaits the Chancellor’s forthcoming Budget announcement.
The UK construction industry has weathered a turbulent period marked by economic uncertainty, planning delays, and cost pressures. Yet, despite these headwinds, certain sub-sectors are beginning to demonstrate a degree of underlying strength, suggesting that the market’s bottom may be in sight.
Residential construction: Slow progress despite interest rate cuts
The residential construction sector continued to struggle through the autumn, following earlier momentum in spring and summer. Overall, residential project starts fell 7% in the preceding three months and 9% year-on-year. However, this marks a milder contraction compared to the sharper declines recorded in the previous quarter.
Private housing activity, which had seen significant setbacks in earlier months, fell by 5% in the preceding quarter and 10% compared to 2024. The social housing sector also recorded declines, down 13% on the previous three months and 7% year-on-year, but signs suggest that the pace of decline is beginning to ease.
The Bank of England’s interest rate cut in August offered a welcome boost to confidence, providing some relief for developers and homebuyers. However, regulatory uncertainty continues to weigh on progress. Ongoing delays linked to Building Safety Act compliance and approval bottlenecks at Gateway 2 under the Building Safety Regulator (BSR) have constrained the number of new housing projects reaching the site. Developers are calling for greater clarity and more streamlined processes to unlock stalled developments and stimulate residential growth.
Non-residential construction: Office sector defies the downturn
The non-residential construction sector showed mixed results during the Index period. While most verticals experienced further decline, the office construction sector emerged as a rare area of strength. Office project starts rose 16% on the previous three months, standing an impressive 91% higher year-on-year. This growth was supported by major developments such as the £37.45 million Wells House office project in Bromley, London, alongside a series of refurbishments and new builds that continue to reshape the UK’s commercial property landscape.
The civil sector also provided modest relief, with project starts up 2% on the previous three months, although still 10% lower than last year. The increase was largely driven by infrastructure activity, where starts climbed 9% quarter-on-quarter and 1% year-on-year, suggesting continued investment in essential public works.
In contrast, other non-residential sectors remained subdued. Hotel and leisure construction fell 27%, while health projects declined 17% quarter-on-quarter and 28% year-on-year. Education sector activity dropped sharply by 23% compared to the previous quarter and 38% year-on-year. Similarly, community and amenity projects fell 35% in the preceding three months and 26% compared to 2024, reflecting ongoing funding constraints and delayed public sector investment.
Regional construction outlook: Uneven performance across the UK
Regional performance across the UK construction market remains inconsistent. The North East stood out as the best-performing region, despite a 12% decline on the preceding three months, ending the period 60% higher year-on-year.
Elsewhere, most regions saw continued weakness. The West Midlands experienced one of the sharpest declines, falling 19% quarter-on-quarter and 7% year-on-year. London recorded a 10% decline from the previous quarter and finished 2% below 2024 levels, reflecting a slowdown in residential and mixed-use development.
The South East and South West both saw declines of 4% and 11% respectively against the previous three months, with year-on-year figures down 19% and 18%. The North West also slipped 5% on the quarter and 2% year-on-year, indicating persistent regional challenges despite national infrastructure investment.
Industry outlook: Slow recovery expected in early 2026
Commenting on the data, Allan Wilen, Glenigan’s Economic Director, noted: “After the declines seen in recent months, the October Index reveals that starts remain subdued. Private housing starts drifted lower as apartment developments face delays in gaining BSR approval. Health, Education, and Community & Amenity project starts were especially weak, before increased capital funding provision from next April. Offices were a welcome bright spot, lifted by new build and refurbishment projects.”
While construction activity remains below historic levels, the latest Glenigan Construction Index suggests the pace of contraction is slowing. This stabilisation, combined with targeted government investment and an improving financing landscape, may help lay the groundwork for recovery in early 2026.
The UK construction sector continues to face a challenging environment, with overall activity subdued across most verticals. Yet the performance of the office and infrastructure sectors, alongside tentative signs of stabilisation, indicates a more balanced outlook ahead.
As industry leaders await fiscal and regulatory clarity, the data underscores the importance of digital construction innovation, data-driven decision-making, and collaborative project delivery to navigate uncertainty and position the sector for long-term recovery.
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