Confidence in the UK’s construction sector appears to be growing, according to the Construction Product Association’s (CPA) construction autumn forecast
The construction autumn forecast predicts that a rise in UK construction output of 2.5% in 2025, then another 3.8% in 2026.
Construction output fell by 2.9% in 2024, after various factors and challenges caused a fall in work.
2024 was a tough year for construction
Three months ago the CPA forecast a 2.0% and 3.6% growth in 2025 and 2026, respectively.
In recent months, construction output has been hit hard, particularly in the private housing and repair, maintenance & improvement sectors.
Private housing new builds interest and mortgage rates suggest that the sector is recovering and the output of new builds is increasing inline with the Government’s housing targets.
One of the largest issues to tackle in order to increase output is in supply chain issues, in particular local council planning resources, water and nutrient neutrality, and biodiversity net-gain requirements.
High-rise housing and commercial buildings are also under strains with delays to construction starts due to uncertainty in the Building Safety Act.
Construction autumn forecast shows hope for the future
Still, with the wider housing market expected to recover due to government focus as well as consumer confidence means the construction autumn forecast predicts a rise in private housing output of 8% in 2025 and 7% in 2026, following a drop of 9% in 2024.
CPA economics director, Noble Francis, said: “Construction has suffered a very challenging period over the past two years, with sharp downturns in the two largest sectors, private housing new build and repair, maintenance and improvement. However, cautious optimism appears to be creeping back into the industry.
Broader UK economic growth, helped by lower interest rates and sustained real wage growth, combined with a stable government, appears to be leading to improving consumer and business investment. However, the government’s Autumn Budget will be key to ensuring that this remains the case.
“There are significant upside risks to the forecasts if the new government can improve the delivery of house building and infrastructure. However, downside risks continue to prevail. The UK construction industry has lost over 10,000 firms in the last two years. ISG, the 6th largest construction firm, is the latest example, as high costs, project delays, and skills shortages on fixed-price contracts acutely affect the whole supply chain.
“In addition, concerns remain over whether the government will cut capital expenditure and pause, delay, review and cancel yet more investment in key infrastructure projects in the short-term to meet its fiscal rules. If so, falls in infrastructure activity could overshadow recovery in house-building and RMI.”
