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\t\tLabour looks unlikely to hit 1.5m homes by 2030 due to construction woes.\t<\/p>\n\t\t\tWednesday 07 January 2026 11:15 am
\n\t\t\t\t\t\u00a0|\u00a0\u00a0Updated:\u00a0<\/p>\n
\t\t\tWednesday 07 January 2026 3:20 pm\n\t<\/p>\n
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\t\tLabour looks unlikely to hit 1.5m homes by 2030 due to construction woes.\t<\/p>\n
The construction sector has now marked one full year of a decline in output, according to a leading survey, blowing a hole in Labour\u2019s ambitious housebuilding targets.<\/p>\n
S&P Global\u2019s monthly survey showed the sector had fallen under a threshold for neutrality in output for the twelfth successive month<\/a>.\u00a0<\/p>\n The reading for December was also the second-lowest since May 2020, researchers said.\u00a0<\/p>\n Housing and commercial construction also suffered the fastest reduction in activity since May 2020 in S&P Global\u2019<\/a>s purchasing managers\u2019 index (PMI).\u00a0<\/p>\n Construction has been damaged by low business confidence and higher costs, including in rising taxes and prices of raw materials over the last year.\u00a0<\/p>\n The rapid decline of the sector underlines the Labour government\u2019s struggles to \u201cbuild, baby, build\u201d as it faces a race against time to meet its 1.5 new homes target.\u00a0<\/p>\n Housing secretary Steve Ree<\/a>d is likely to face renewed scrutiny of the effectiveness of the government\u2019s planning reforms<\/a> as they come into place this year.<\/p>\n Government to \u2018undershoot target\u2019 due to construction woes<\/p>\n S&P Global analysts also said weeks of speculation over property taxes in the lead-up to the Budget dampened activity across engineering, house building and commercial construction.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tConstruction in worst downturn for five-and-a-half years<\/a><\/p>\n \u201cDespite a lifting of Budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year,\u201d Tim Moore, economics director at S&P Global, said.\u00a0<\/p>\n The latest set of data also revealed job shedding continued in December, albeit at a more \u201cmoderate\u201d pace, and a lack of new orders to replace completed projects.\u00a0<\/p>\n There was also a slight recovery in business optimism, with 37 per cent of firms expecting a rise in output levels over the upcoming year. However, one in five (20 per cent) expected output to decline.\u00a0<\/p>\n The optimism comes largely as a result of greater investment in utilities such as water and energy infrastructure<\/a>.\u00a0<\/p>\n \u201cThe weakness in the housing balance is consistent with the low supply of new homes in 2025,\u201d Amy Wood, Capital Economics real estate economist, said.\u00a0<\/p>\n \u201cNew housing starts are likely to rise this year, though they will remain low by past standards and undershoot the government\u2019s homebuilding target.\u201d<\/p>\n Pantheon Macroeconomics analysts said the continued contractions across the construction sector would weigh down on its growth forecasts for 2026 though activity could \u201coutperform the signal from the PMI\u201d.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n