UK construction to recover in 2027 after sluggish 2026

That’s according to construction intelligence firm Glenigan.

Its latest forecast expects the value of these underlying starts to fall by 13% in 2026, a much steeper decline than the 1% it forecast in the summer. Even with next year’s rebound, the value of starts would remain below its 2025 level. Glenigan expects a further 7% rise in 2028.

Private housebuilding has been hardest hit. Glenigan expects the value of private housing starts to fall by 24% this year as higher mortgage rates weigh on demand and rising development costs prompt housebuilders to delay opening sites. It expects a gradual recovery from mid-2027.

Civil engineering starts are forecast to rise by 11% next year and 10% in 2028 after a 9% fall in 2026. Water companies’ investment programmes, renewable energy projects and upgrades to the electricity grid are expected to support growth.

Glenigan expects the value of education and health starts to grow by just 1% each this year. As projects under the School Rebuilding Programme and New Hospital Programme reach construction, it forecasts growth of 9% in education and 11% in health in 2027.

Allan Wilen, Glenigan’s economic director, said, “Momentum is picking up, particularly as funds from the Spending Review are released and public projects, utilities upgrades and critical infrastructure investment gradually start to come online. We believe this, combined with impetus in specific private sector niches like offices and data centres, will have a fortifying effect across the rest of the industry. It could potentially spark a chain reaction leading to sustained recovery in the second half of next year, which may be maintained throughout 2028.”

UK construction has experienced a long period of stagnation, according to Glenigan, which pointed to the Russia-Ukraine war that forced new supply arrangements, as well as more recent conflict between the US, Israel and Iran, which has pushed up energy prices.