UK construction improves in Q4 despite residential sector decline
Glenigan has published its latest Construction Index, which shows an increase in construction starts towards the end of 2025.
The construction industry insight specialist’s report reviews the three months to the end of December 2025, and found that construction performance has started to improve following a sluggish end to Q2 2025 and a depressed Q3. During the period, project starts on-site rose by 7%.
Glenigan says that, despite start activity remaining 7% lower than 2024 figures, the outlook for the coming year is far from gloomy and, with significant government funding in areas including housebuilding, amenities, critical infrastructure and capital projects, there’s hope that this cash injection into the public realm will act as a catalyst to thaw currently frosty private investors both home and abroad.
According to the Index, this current and potential growth is being seen across a variety of different verticals and, whilst residential categories posted losses, non-residential counterparts (including civils) posted strong results during Q.4 and against the preceding year.
Commenting on the results, Glenigan’s economics director, Allan Wilen, said: “Contractors and subcontractors across the UK will be breathing a sigh of relief that, contrary to expectation and speculation, the sector finished up 2025 on a positive note, buoyed by significant Q4 growth across non-residential verticals, particularly office and industrial where work has skyrocketed providing much needed momentum.”
“Looking at the year ahead, whilst it won’t be a cake walk by any means, hopefully this non-residential activity boost will provide the basis for a further strengthening, reflecting the 2026 return-to-growth predictions we made in our recent Construction Forecast. However, this only addresses half the story. In the short term, the toughest nut to crack will be the persistent private residential market stagnations. Languishing in the doldrums, it desperately awaits a return of house-purchaser confidence and faster BSR clearance of high-rise projects; something the Government will no doubt chew over intensely over the first half of the year to find a way of easing the deadlock.”
The residential sector saw mixed results, registering a modest 2% decline in the preceding three months, down by 20% against 2024 figures. Drilling deeper, private sector activity maintained a downward trajectory, posting 15% drops during Q4 and falling 29% compared to the previous year.
Social housing, however, fared somewhat better, with 28% rises during the period to finish 16% up on last year.
The non-residential sector experienced a robust period of growth, with most verticals scoring an increase during Q4.
Office construction rose by 11% against the preceding three months and 53% above 2024 levels, which can be largely attributed to the commencement of some sizeable projects, including the £70million Dirac Building on the new St John’s Innovation Park development in Cambridge, and various other schemes.
Industrial project starts were similarly on the up, increasing by 41% during the period and by 57% against the previous year. The commencement of various schemes up and down the UK helped to support sector growth.
Once again, community and amenity projects saw an increase, with project starts on-site up by 37% on 2024 figures and by 29% compared to the preceding three months.
On a regional level, the Capital was the standout performer, rising to 35% against the preceding three months to stand 33% up against the previous year. The North East also performed well, rising 10% against the preceding three months and 34% up against the previous year. It was a similar story in Yorkshire & the Humber, where project starts rose by 16% against the preceding three months to stand 1% up on the previous year.
However, the South West experienced a mixed performance, rising to 20% against the preceding three months, yet finishing 6% down against the previous year.
The West Midlands experienced an especially poor period, declining by 19% against the preceding three months and declining to 12% against the previous year. The South East also struggled, declining 7% against the preceding three months to stand 14% down against the previous year.
Source: Showhouse
