UK construction performance plummets

The latest Glenigan Construction Index, powered by Hubexo, has revealed a sharp decline in UK construction activity during the three months to September 2025. Performance across the residential, non-residential, and civil engineering sectors fell significantly, with only limited pockets of growth in office construction and infrastructure. The findings paint a picture of an industry under sustained pressure from economic uncertainty, low investor confidence, and public spending hesitation.

Construction starts in decline

Overall, the value of construction work starting on-site fell 16% compared to the previous quarter, leaving performance 15% below 2024 levels. The declines were most severe in the residential construction sector, which contracted by more than a quarter, while non-residential construction starts also faltered.

Residential construction starts fell 26% against the preceding three months and 24% year-on-year.
Non-residential project starts dropped 9% compared to Q2 2025 and were 5% lower than 2024 levels.
Civil engineering projects offered a small bright spot, rising 4% compared to the previous quarter, though still 13% down on last year.

This downturn follows a brief resurgence in spring and early summer, underlining the volatility of the UK construction market and the wider challenges facing contractors, developers, and clients.

Residential construction: momentum lost

The residential sector continues to bear the brunt of market pressures. Overall housing starts declined sharply, reflecting subdued buyer confidence, delays in planning approvals, and ongoing issues around the Building Safety Regulator (BSR) process.

Private housing starts dropped 25% in Q3 and were 23% down on 2024 figures.
Social housing construction performed even worse, with activity slashed by 29% against the preceding three months, standing 24% lower than last year.

These figures confirm that UK housing delivery targets remain under severe strain, raising concerns for policymakers and developers ahead of the Autumn Budget.

Non-residential construction: mixed results

While the non-residential sector showed overall decline, there were a few standout areas of growth.

Office construction was the strongest performer, with starts rising 32% against Q2 and an exceptional 123% year-on-year. Landmark retrofit projects such as King’s College London’s £86 million redevelopment of Bush House and the £59 million retrofit of 30 Finsbury Square in London contributed to this surge.
Health construction projects fell dramatically, down 21% against the preceding quarter and 30% year-on-year.
Education construction also struggled, with a 19% quarterly decline and 32% year-on-year drop.
Hotel and leisure construction was down 11% on Q2 and 1% compared to 2024.
Retail construction activity weakened by 17% on the preceding quarter and 28% year-on-year, mirroring weak consumer sentiment.
Community and amenity projects declined 24% quarter-on-quarter, though activity remained 12% higher than 2024 levels.

Civils and infrastructure: a fragile upswing

The civil engineering sector offered some modest improvement, with a 4% quarterly rise. Infrastructure projects were the key driver, increasing 9% from Q2 2025 and 4% year-on-year. However, this was offset by a sharp decline in utilities work, which fell 2% against the previous quarter and stood 26% below 2024 levels.

This uneven performance underscores the uncertainty surrounding UK infrastructure investment and the need for clearer long-term funding commitments.

Regional construction performance

Performance across the UK regions varied considerably, with only the North West showing consistent resilience.

North West: Up 6% on Q2 2025, flat against 2024 levels.
North East: Down 32% on the preceding quarter, but 54% higher year-on-year.
West Midlands: Fell 13% on Q2, but up 5% year-on-year.
London: Plummeted 27% compared to Q2 and 20% below 2024 levels.
South East: Down 17% on the preceding quarter, 25% lower than 2024.
South West: Declined 24% quarter-on-quarter, 23% lower than last year.

These results highlight the ongoing disparities in regional construction output, with London and the South struggling despite strong demand for housing and commercial space.

Industry outlook: cautious eyes on the Autumn budget

Commenting on the results, Allan Wilen, Economic Director at Glenigan, noted that the sector is once again caught in a cycle of “encouraging mid-year signs giving way to fresh decline.” He highlighted weak housebuyer confidence, slow BSR approvals, and public sector delays as major contributors to the downturn.

While the strong performance in office construction demonstrates that confidence can return under the right conditions, the wider picture remains challenging. The industry is now waiting for the Autumn Budget 2025, hoping for measures to stimulate growth, accelerate housing delivery, and encourage infrastructure investment.

The October 2025 Glenigan Construction Index underlines the fragility of the UK construction sector, with residential housing starts, health, and education projects all recording steep falls. While there are bright spots in office retrofits and infrastructure projects, these gains are not enough to offset widespread decline.

With construction activity in the UK heavily influenced by economic confidence, regulatory processes, and public investment, industry leaders will be looking for targeted government intervention to stabilise the market. Until then, market confidence remains in short supply, and performance is likely to remain subdued heading into 2026.

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