Construction Market Overview: April 2025
A monthly round up of key Construction Market Data and Forecasts including statistics from industry commentators and influencers.
Construction output edges forwards in Q1 2025, despite persisting market headwinds
The ONS have published their construction output data for February 2025, showing that Construction output increased by 0.4% in February, following a 0.3% decline in January, driven by a 0.3% rise in new work and a 0.3% rise in repair and maintenance, as warmer weather later in the month significantly helped activity. Alongside this public sector work led activity, with public other new work and public housing repair and maintenance rising by 4.4% and 4.0% respectively. However, over the three months to February, construction output was flat at 0.0%, as increases in new work of 1.2% were offset by a 1.5% fall in repair and maintenance.
In March, UK construction activity contracted or the third consecutive month, despite the S&P Global UK Construction PMI® increasing to 46.4 from 44.6 seen in January, remaining below the 50.0 threshold that signals growth. Civil engineering was the weakest-performing segment, hit by project delays and a weak infrastructure pipeline, while commercial and residential sectors also declined amid subdued demand and economic uncertainty. Business confidence fell to its lowest since October 2023, as new orders continued to fall, and firms reported fewer sales enquiries and increased competition for work, alongside job cuts accelerating at their fastest pace in nearly four-and-a-half years. Rising input costs, driven by higher wages and inflation, further pressured margins, though there was cautious optimism around demand in the renewable energy sector.
According to Glenigan’s April 2025 Construction Review, in the first quarter of 2025 UK construction project starts fell by 21% year-on-year, marking a continued downturn driven by economic uncertainty, cautious client sentiment, and mounting concerns over international trade tariffs. Also, both major (£100m+) and smaller (<£100m) projects underperformed, with delays in transitioning from contract awards to on-site activity contributing to the sluggish start. However, there are signs of cautious optimism as detailed planning approvals rose 8.0% quarter-on-quarter, with notable year-on-year increases in Hotel & Leisure, Education, and Civil Engineering. Overall, these trends suggest a potential rebound in project starts later in the year.
Housing market shows mixed signals: Completions down, transactions up, prices steady
According to MHCLG, England recorded 36,580 housebuilding completions in Q3 2024, marking a sharp decline of 13.4% compared to the previous quarter and 12.2% fall compared to the same period a year ago. Completions are now 26.0% below the most recent peak seen in Q1 2021, highlighting the continued slowdown in housing delivery.
The HMRC report that in February the number of property transactions in the UK totalled 108,250, 13.0% than the 95,110 seen in January, and 28.8% higher than a year earlier, although this is compared with a low base in in winter 2023/24. February’s monthly rise in transactions was the third successive rise as the housing market continues to gradually recover from the lows of demand during 2023. Alongside this, the Bank of England report that in February, the number of mortgages approved for house purchase was 65,481, which is 0.8% lower than January and 8.2% higher than a year earlier, despite approvals being broadly flat since August 2024.
Nationwide report that in March 2025, UK house prices remained stable with no change (0.0%) month-on month. Annual growth also held at +3.9% compared to February, as the market continues to show signs of resilience. However, Halifax report that in March 2025, UK house prices decreased 0.5% compared to the fall of 0.2% seen in February but still remains stable as annual house price growth is unchanged for March at +2.8%. Overall, a gradual recovery in prices is expected over the summer, supported by rising real earnings, low unemployment, and the prospect of falling borrowing costs.
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