The latest Glenigan Construction Review (September 2025) paints a bleak picture for the UK construction sector, as private housebuilding activity collapses, dragging down overall industry performance. Covering the three months to the end of August 2025, the report shows that momentum gained earlier in the year has been decisively reversed, with a combination of economic uncertainty, weak investor confidence, and slow-moving public sector projects creating significant headwinds.
UK construction sector performance: recovery stalls
According to the Glenigan Review, UK construction project starts declined by 22% during the review period, leaving activity 36% lower than in 2024.
- Main contract awards: down 33% year-on-year and 24% compared with the previous three months.
- Detailed planning approvals: down 48% against the previous quarter and 17% lower than 2024.
This across-the-board decline highlights the scale of disruption currently facing the construction industry. Major and underlying projects alike have been affected, leaving contractors, subcontractors, and developers navigating some of the toughest market conditions since the pandemic recovery years.
Allan Wilen, Glenigan’s Economic Director, commented: “Once again, the UK construction sector seems to have been overtaken by events where a moment in the sunshine over Q2 and most of Q3 has given way to the dark clouds of decline. Weakness spans projects of all sizes, with the residential sector hit hardest.”
He added that a mixture of hiring freezes, rising unemployment, and slow approvals from the Building Safety Regulator have undermined confidence, leaving the outlook for Q4 2025 particularly challenging.
Residential construction sector hit hardest
The UK residential construction sector has borne the brunt of this downturn, with private housebuilding projects falling sharply.
- Project starts: down 10% year-on-year.
- Main contract awards: down 44% compared with 2024.
- Detailed planning approvals: down 42% year-on-year.
This collapse reflects the continued impact of stamp duty increases and broader affordability concerns, which have slowed the pace of private housing development. Despite these challenges, private housing still accounted for 48% of all project starts, though at 7% below last year’s levels.
Bright spots in residential construction
While private housing activity has slumped, other segments of the residential market showed resilience:
- Student accommodation: doubled year-on-year to reach £1.064 billion in project starts.
- Social housing: demonstrated growth in both starts and approvals during the review period.
These pockets of growth suggest that demand-driven sub-sectors are still attracting investment, even as broader housing market conditions remain subdued.
Non-residential construction: pockets of growth
Despite the grim overall picture, several non-residential construction sectors saw strong performance:
- Office construction: project starts rose by 125% year-on-year, reflecting renewed demand for modern, flexible workspace.
- Hotel and leisure construction: project starts increased by 23%, led by growth in indoor leisure facilities.
- Community and amenity projects: project starts grew 30% year-on-year, while main contract awards surged 120%, driven by new prison and blue-light infrastructure projects.
These improvements highlight areas of resilience within the broader construction market, even as residential and public sector projects remain under pressure.
Civil engineering and infrastructure construction: regional surges
Civil engineering construction was the only vertical to post a rise in planning approvals, which surged 171% year-on-year.
- Wales accounted for 25% of total approvals, reaching £3,014 million, reflecting four-digit annual growth.
- The North West followed with a 22% share, growing 423% year-on-year to £2,735 million.
This surge demonstrates the strength of regional infrastructure investment, though it remains to be seen whether these planning approvals will translate into rapid project starts amid wider sector uncertainty.
Outlook: uncertainty persists
The September 2025 Glenigan Review confirms that the UK construction sector recovery has been put on pause, with private housing activity acting as the biggest drag on performance. While student accommodation, social housing, office construction, and civil engineering approvals provide some cause for optimism, these gains are not yet sufficient to offset the steep declines across the wider residential market.
Going into Q4 2025, the construction industry faces a perfect storm of weak demand, policy-driven disruption, and investor caution. Until market confidence is restored and a clearer framework for housing and public sector investment is established, the sector is likely to remain under pressure.
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