After a turbulent period and 2024 kind of living up to being a “nothing year” for UK construction, the industry is set for a rebound in 2025. Key sectors are showing signs of growth, supported by economic recovery, easing inflation, and significant public and private investment. Many of the anticipated trends last year are taking shape as we shake off 2024’s cautious optimism.
Here’s a couple of things to expect in 2025 for UK construction.
Offices
The office sector is poised for a resurgence with 18% growth in project starts forecast for 2025. Hybrid working trends continue driving demand for high-quality refurbishments and environmentally efficient spaces, as companies adapt to new ways of working. Plus government announcements of billions of investment in digital infrastructure will likely stimulate further demand for data centres and tech-enabled office spaces. This aligns closely with last year’s prediction that refurbishments would offset declines in new office developments, although it appears stronger than predicted.
Infrastructure
Public investment is leading the charge in 2025, driven by commitments to long-term infrastructure funding. The Spending Review in Spring 2025 is expected to clarify significant allocations to utilities and transport, whilst the water industry’s AMP8 programme will double investment. And then there’s Net Zero ambitions which are generating more funding for renewable energy and grid expansion. As a result, civil engineering starts (which saw a slight decline in 2023) are expected to grow by 5% in 2025, reinforcing predictions made last year.
Private Housing
Private housing, which has faced significant challenges in recent years, is finally showing signs of sustained recovery. Starts are forecast to grow by 13% in 2025 due to improved affordability and high demand, and buyer confidence seems renewed as shown by a jump in mortgage approvals at the end of 2024. This recovery was predicted last year, but the growth seems stronger than expected.
Summary
Reflecting on a year ago, many of the anticipated trends for 2025 have materialised:
Stability: Election done, inflation is cooling, interest rates are dropping, and GDP growth is upward.
Construction Starts: Following a 7% decline in 2023, project starts have stabilised and are forecast to grow by 8% in 2025.
Challenges Persist: Labour challenges remain a significant constraint, while material costs are still high and pressure margins.
2025 could be a turning point for UK construction. The industry is bolstered by public spending, renewed private sector confidence, and a clearer political landscape.