Private housebuilding is expected to significantly contribute to construction sector growth of more than a fifth over the next two years.
Glenigan’s data reveals construction output is expected to rise by 21 per cent over the next two years.
In its UK Construction Industry Autumn Forecast 2026-2027 report, the construction analyst says it expects private housebuilding to remain on course to grow significantly. It also foresees commercial office project starts continuing their ascent.
Glenigan’s economic unit forecast a 13 per cent boost in activity and suggests that the industry will be “relieved” at the limited negative impact of international conflict, trade wars and policy speculation on construction.
It says the sector will be in a good position to kickstart activity following next week’s Autumn Budget.
Glenigan economic director Allan Wilen said: “As with any forecasts, it’s difficult to foresee unpredicted and spontaneous political and economic issues until they suddenly land, often completely changing the situation.
“The ‘will they/won’t they’ attitude that the professional and consumer landscape has taken towards trailed government policy has done nothing to inspire confidence in the latter part of 2025.
“This is borne out by the dramatic performance decreases we’ve seen across our own indexes since the summer, dashing any hopes of recovery by the end of this year.
“However, the chancellor has a real opportunity within this Budget to rebalance the situation and ensure that a kickstart into 2026 is not the false start we witnessed in the spring of this year.”
Glenigan says it foresees a rise in both private and public sector project starts, with residential construction returning to positive figures after a blip over this summer and autumn.
“In the public space, the government will be hoping to kickstart a number of capital projects, especially around renewables, as well as deliver on its social housing commitments and promised increases in funding for health and education,” the report says.
“More broadly, a renewed commitment to delivering net zero across state-owned assets by 2050 will present ample opportunity for contractors and subcontractors to seize on.”
It adds that when the Building Safety Regulator reduces its well-documented backlog of project planning approvals, this will also support sector growth.
However, it warns that bricks and mortar retail will be slower to recover as operators face increased cost pressures from the national insurance increase and rise in the minimum wage.
“Looking towards the public space, the entire construction industry is waiting with bated breath to see what the chancellor will pull out of the hat in the Autumn Budget,” the report says.
“After what appears to be a series of false starts, all will be looking for clarity, particularly in areas such as health and education.”
Although the Labour government has increased capital funding for the school rebuilding programme and further education in 2025/26, it notes, previous uncertainty appears to have disrupted local authorities’ development plans, leading to a decline in the value of school and college project starts this year.
Glenigan predicts a clearer funding pipeline will boost activity across the sector in 2026 and 2027, with strong growth forecast in further education as the government prioritises vocational training.
A progressive rise in water industry activity is forecast to lift utility starts during 2026 and 2027, as the AMP8 investment programme gathers momentum.
Wilen said: “There are some very encouraging signs already across different verticals and it will be up to the industry to take advantage of them.
“In some cases, that might mean diversifying to meet more niche demands around low-carbon construction and commercial fit-out or even different building approaches.
“So, while we’re experiencing short-term struggles, we’re still confident of a brighter long-term picture.”