Private housing leads the decline with a 40% quarterly drop in starts
Residential construction dropped 31% for the three months to the end of June against the preceding three months and by 52% year-on-year, according to the July 2026 edition of Glenigan’s Construction Index.
Project values were also slashed in half compared to 2025 levels.
Private housing led the decline as high interest rates and rising labour and material costs impacted the market. Starts dropped 40% compared with the preceding three months and were 63% lower than a year ago.
A perfect storm
Allan Wilen, Glenigan’s economic director, said: “In another perfect storm for the UK construction sector, a sharp decline in residential projects led the sector decline during the second quarter. This drop reflects the impact of the Iran War on consumer confidence, with developers adjusting their development programmes in response to a slowing housing market.”
Non-residential starts were more stable, but Wilen said the wider market should pick up later this year. “Whilst this year will end in negative numbers, our forecasting predicts that we will see a return to growth next year as economic conditions improve, alongside an easing in inflationary pressures and interest rates, and as funding from the Spending Review grows. So, whilst the current picture is unclear, we should expect to see, at least, some bottoming out and revival in Q.4, heralding a larger uptick in 2027.”
