While rising material costs, labour shortages and energy prices have taken their toll on the construction industry in recent years, many experts are now predicting a more positive outlook going forward.
In its Construction Industry Forecast for 2025-2026, Glenigan predicts a growth of 8% for construction this year, and 10% in 2026. Notably, the report cites housing, particularly private housing, as a major driver of this growth, estimating a 13% rise in private housing starts in 2025, and a 15% rise in 2026.
While slightly more reserved in its predictions, the Construction Products Association also anticipated growth in its autumn forecasts, placing overall construction growth at 2.1% in 2025 and 4.0% in 2026.
What factors are driving growth in private housing projects?
Glenigan highlights several reasons for the rise in private housing projects over the next two years.
After the sector began to show signs of stabilising towards the end of 2024, a strengthening in household incomes, greater political certainty and an easing in borrowing costs have left the organisation hopeful for 2025.
The report states that mortgage approvals during the third quarter of 2024 were 39% higher than a year prior. This rise in house sales is expected to encourage developers to accelerate both the development of existing projects and the opening of brand-new sites.
What has the government said about housebuilding?
The Labour government has made housebuilding a focal point of its plans since being elected last year.
Over the next five years, Labour has vowed to build 1.5 million new homes, including the creation of several ‘new towns’, and a fast track approval process for the delivery of high-density housing on urban brownfield sites.
Labour has also promised a £3bn support package for SMEs and the build-to-rent sector. This could potentially benefit newer developers and unlock smaller sites that wouldn’t necessarily appeal to large, established house-building firms.
What does this mean for those working, or thinking of working in the construction industry?
All of the above should come as welcome news for workers who already possess in-demand construction skills, or who may be considering a switch to a career in the industry.
For all of the positive outlooks, skills shortages still continue to be a major burden across the industry, with bosses regularly touting this as the biggest ongoing challenge they face. In fact, according to money.co.uk, via Scaffmag, construction is facing the second-highest workforce shortage in the UK.
This, however, leaves those with the necessary skill sets and qualifications in a strong position when it comes to job opportunities, progression and earning potential.
Labour has also said it wants to create 650,000 new jobs in ‘industries of the future’ paving the way for a growing demand for sustainable construction roles. The party has also set aside £6.6bn to upgrade homes as part of its Warm Homes Plan, again, pointing towards a busy future for the construction sector.