Published: 22nd December 2025
As 2025 draws to a close, the UK construction sector remains in a state of cautious recalibration. While some indicators at the margin suggest stabilisation, a range of pressures — from output contraction to planning bottlenecks and policy uncertainty — continue to shape the picture. In this month’s overview we dive into the latest official data, industry sentiment and broader economic developments affecting the built environment.
Output Trends: Weakness Continues into Late 2025
Recent estimates from the Office for National Statistics (ONS) show that construction activity has been under persistent strain toward the end of the year. Total construction output is now estimated to have fallen by 0.3% in the three months to October 2025, with repair and maintenance down 1.0% and new work up just 0.1% over the same period — reflecting a sector still struggling for broad momentum. Monthly output in October 2025 was also lower, declining by 0.6% compared with September.
While this paints a muted picture overall, it’s worth noting that output in some subsectors — such as private industrial and non‑housing new work — is showing relative resilience, even as core housing repair and maintenance and broader residential segments remain soft.
PMI: Activity Signals Still Tepid
Business surveys continue to reflect subdued market sentiment. A recent PMI snapshot showed UK construction activity contracting sharply, with new orders, civil engineering and residential segments all weak. According to S&P Global’s latest commentary, construction output fell in November at its sharpest pace in more than five years, with client confidence low and tender pipelines shallow — underlining persistent caution among buyers and developers.
New Orders & Business Confidence
Despite weak output, new orders in construction showed some underlying support through Q3 2025, according to the latest ONS statistics, which recorded growth in new work values ahead of Q4.
At the same time, broader private sector indicators highlight continued pressure on business sentiment: the CBI reported a sharp private sector slowdown heading into 2026, with its order book balance improving slightly in December but still well below long‑term averages, reflecting soft demand and ongoing cost pressures for firms.
Planning & Housing Delivery Challenges
On the housing front, planning permissions are down sharply, hitting their lowest level in more than 15 years and threatening delivery targets. Government figures reveal that only around 208,000 new homes were approved in the year to September, significantly below the levels needed to meet ambitious housing pledges — including the government’s promise of 1.5 million homes.
Adding to this, policy changes to accessibility standards for new homes have sparked controversy, with advocacy groups warning that cuts to accessibility targets will reduce the supply of fully wheelchair‑accessible housing — a key consideration for inclusive design moving forward.
Materials & Cost Dynamics
The latest Building Materials and Components statistics from the Department for Business and Trade provide a snapshot of price and supply conditions across key materials. These show ongoing volatility in price indices and supply for items like bricks, concrete blocks and aggregates, underscoring continued cost pressures through late 2025.
While the ONS material commentary confirms that output price growth remains modest, construction firms continue to grapple with higher labour and energy costs, which, coupled with global supply chain disruption, have kept overall input prices elevated relative to pre‑pandemic norms.
Outlook: Forecasts Point to Slow Growth Ahead
Looking ahead, industry forecasters expect some improvement in the medium term. The Construction Leadership Council’s Monthly Construction Update incorporating Experian’s Winter 2025 forecasts projects modest output growth in 2026 and stronger gains in 2027, driven by infrastructure investment and residential demand re‑asserting itself if economic conditions stabilise.
Similarly, the Construction Products Association’s Autumn 2025 forecast sees total construction output returning to growth, though at a tempered pace compared with earlier projections.
Final Thoughts from Leading Edge
2025 closes as a year of two halves for UK construction — weak output and sentiment in late 2025 contrast with pockets of resilience in new orders and medium‑term forecasts. Planning and delivery obstacles remain a drag, particularly for housing, and broader macro pressures will be a key factor into 2026.
At Leading Edge, we continue to monitor these dynamics closely and help clients prepare for the next cycle of investment and project delivery — whether that’s adjusting product strategies, aligning with emerging sectors like energy infrastructure, or re‑targeting regional demand.
👉 Get in touch to explore how we can support your plans for 2026.
Sources: ONS, S&P Global, CBI, Government planning data, Build UK, CPA forecasts
Written by the Leading Edge team – 22nd December 2025
