Construction market output is expected to reach £168.6bn by the end of 2025, with growth driven by private housing, infrastructure investment and retrofitting, while total construction output is forecast to increase by 1.9% in 2025 and 3.7% in 2026.
This is according to the sector consultancy McBains’ Construction Market Report for Summer 2025 which projects private housing output to rebound with 4% growth in 2025 and 7% in 2026, driven by government initiatives and increased demand.
The report also forecasts a continued increase in build-to-rent developments and large-scale mixed-use developments that feature substantial affordable housing and town centre regeneration projects.
The medium-term prospects for the property and construction industry remain buoyant despite current market uncertainty, according to McBains.
But the report also says to provide cover for concerns over costs and pricing, more developers are expected to continue to push forward with major commercial projects on a stage-by-stage basis and a resurgence of the package-based procurement model instead of traditional ‘lump sum’ contracts.
Labour will remain the primary long-term cost driver, with projections of around 19% rise in wage costs by 2029, and the construction industry will continue to face the challenge of an ageing workforce, with more workers reaching retirement than those entering the workplace and as a result the UK needs 225,000 more skilled workers by 2027.
Commenting on the report McBains director Colin McCaffrey said:
“The construction and property market has been facing economic uncertainty for several years, shaped by a series of disruptions including Brexit, Covid, the wars in Ukraine and the Middle East and, as seen in the last quarter, concerns over a potential trade war with the Trump administration.”
He added: “These events unsettle market confidence and they are not just fleeting issues: they are fundamental conditions affecting investment decisions and project timelines.
“But despite these challenges, the report shows that medium-term confidence is buoyant, with growth in private housing, infrastructure and industrial work predicted. Nevertheless, factors such as planning logjams, skills shortages and wage costs will still represent key challenges over this period.”
