TDUK SupplyingTimber Issue 8 DIGITAL - Magazine - Page 23
———— 2025 CONSTRUCTION INDUSTRY FORECAST ————
IS THE CONSTRUCTION SECTOR
FINALLY SET FOR RECOVERY?
he UK construction
sector, after
enduring a
tumultuous period
in 2023 and 2024, may be
poised for gradual recovery in
2025 and 2026.
While economic conditions
remain uncertain, and
challenges such as mortgage
rate 昀氀uctuations and regulatory
constraints persist, there is
cautious optimism, particularly
in the housing and repair,
maintenance, and improvement
(RM&I) sectors.
Total construction output
is expected to grow by 2.1%
in 2025, before accelerating
to 4.0% in 2026, according
to the Construction Products
Association's (CPA) Winter
T
2025 Forecast. These 昀椀gures
mark an improvement from
the deep contractions seen in
previous years, but the pace of
recovery is slower than has been
previously forecast.
Continuing economic
sluggishness, fewer interest rate
cuts, and ongoing in昀氀ationary
pressures have all contributed
to this more tempered outlook.
Nevertheless, key areas like
private housing and RM&I are
expected to regain momentum.
Private housing is
昀椀nding its footing
The private housing sector
remains the largest and
most visible segment of UK
construction. Despite a sharp
decline in activity in 2023,
Image: © The latest
Construction Growth
Forecast from
the Construction
Products Association
↑
Construction Output % growth
6.8%
4.0%
2.1%
2.1%
-2.9%
2022
2023
2024
2025f
2026
(e)
(f)
(p)
Source: ONS, Construction Products Association.
SUPPLYING TIMBER
23
SPRING 2025
amounting to a 14.3% fall in
output, and a further estimated
drop of 9.0% in 2024, the
sector is expected to be 昀椀nally
entering a recovery phase. In
2025, private housing output
is forecast to rise by 6.0%,
followed by an 8.0% increase
in 2026 – albeit from a very low
base.
One of the key drivers for
this resurgence is the gradual
improvement in mortgage
approvals. The decline in
mortgage rates during
mid-2024 led to an upturn
in approvals and property
transactions, signalling the early
stages of a housing market
recovery. However, 昀氀uctuations
in mortgage rates, coupled
with a昀昀ordability concerns,
have tempered expectations
for a rapid rebound. Major
housebuilders anticipate
annual growth of 5-10% in
housebuilding, though this
remains contingent on economic
conditions and government
interventions.
Can we build
1.5 million homes?
There is a general consensus
that the government's target of
constructing 1.5 million homes
over the current parliament
term is unlikely to be met. A
more realistic expectation is
between 1.1 and 1.2 million
THE MARKET
THE
MARKET
There is cautious optimism that, after a challenging few years, the
construction industry could 昀椀nally be preparing for gradual growth over the
coming years as the economy improves, though key risks still lie ahead.
