Construction project starts fell 49% over the quarter and 28% year-on-year, even as main contract awards rose 45% quarterly and 120% annually, Glenigan’s latest review shows.
The September 2026 edition of Glenigan’s Construction Review, covering the three months to the end of August, found detailed planning approvals also fell, down 7% against the preceding quarter and 13% year-on-year.
Glenigan said planning departments remain under strain from budget cuts, restructuring and staffing shortages, while regulatory change is reshaping developer behaviour. The second staircase requirement, which takes effect at the end of September, is likely prompting some developers to pause or redesign affected residential schemes, and the new Infrastructure Levy has left others reassessing viability before committing to projects.
Despite the fall in starts, contract awards climbed on the back of major project and infrastructure commitments, including detailed plans for the £126m A40 Bus Lanes and Active Travel Development.
Allan Wilen, economics director at Glenigan, said: “UK construction activity remained subdued over the last few months with fewer projects starting, reflecting a market still weighing up its options. Yet there are reasons for cautious optimism, especially the impressive rise in contract awards, with the dial shifting on the back of major project commitments and infrastructure schemes, providing a morale boost for clients and investors.
“The public sector is doing a lot of heavy lifting, with health leading the way as hospital schemes and new wellness centres progress, while community projects, particularly military and blue light, are building real momentum. No doubt a 10.6% year-on-year rise in public investment will show the sector at large that government money is starting to reach live projects, whilst the sharp rise in office planning approvals is a green shoot worth keeping an eye on.
“The wider picture is showing tentative signs of life, with GDP growing 0.3% in June after stagnating in April and May. However, the same old challenges are still felt across the sector and much depends on seeking out opportunity in a landscape of fluctuating economic conditions, shaky financing availability, high borrowing costs and lukewarm investor confidence in the months ahead.”
Residential
Residential starts fell 33% year-on-year as housebuilders held back against a difficult backdrop, though main contract awards jumped 77% annually and detailed planning approvals rose 7%, pointing to a healthier medium-term pipeline.
Private housing held the largest share of starts at 47% but fell 34% to £3,155m; private apartments dropped 21% to £1,525m; and social sector housing declined 33% to £1,161m. Detailed plans were approved for the £600m Borough Triangle development in London, with a main contractor yet to be appointed and completion due in the third quarter of 2034.
Non-residential
Office starts fell 24% year-on-year and contract awards dropped by the same margin, though planning approvals surged 147% on the back of several large schemes. Retail starts edged up 4% and contract awards leapt 236%, while approvals slipped 11%. Supermarkets drove retail gains, up 69% to £264m and taking a 70% share, while shops fell 59% to £68m. Hotel and leisure starts eased 2% year-on-year, but contract awards soared 761% following a run of major projects.
Public sector
Health led the public sector, with starts up 13% year-on-year, planning approvals rising 71% and main contract awards climbing 1,852%. Hospitals accounted for 43% of starts, up 18%, while dental, health and veterinary centres grew fastest at 104%. Education starts fell 33%, though contract awards rose 84%.
Community and amenity starts rose 25% and approvals surged 123%, with military projects leading at a 34% share, up more than tenfold to £200m, ahead of prisons at £178m and blue light schemes at £113m.
Civils and infrastructure
Civil engineering starts fell 28% year-on-year, with contract awards down 35% and planning approvals down 67%. Roads accounted for 33% of total starts, rising 22% year-on-year. Industrial activity weakened, with starts down 49% and contract awards down 9%, though planning approvals rose 16%. Manufacturing held the largest industrial share at 56% but fell 57% to £744m, while warehousing and logistics dropped 35% to £528m.
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