UK Residential Construction Sees Strong Rebound

UK residential construction has seen a marked rebound recently, signalling recovery and growing momentum after last year’s sluggish performance. According to the latest Glenigan Construction Index for July 2025, covering projects valued at £100 million or less, the industry is showing firm signs of recovery.

A Strong Second Quarter for Site Starts

During the three months to the end of June, the volume of work commencing on-site increased by an impressive 49% compared to the previous quarter. Even more encouraging, this figure stands 25% higher than the same period in 2024. Confidence is steadily returning to the built environment. Consequently, developers, contractors, and the wider supply chain feel more optimistic.

This upswing follows Glenigan’s positive summer forecast, which projected a 24% rise in overall construction activity over the next two years. The Index now provides firm data backing those predictions.

Residential Sector Leads the Way: UK Residential Construction

By far the standout performer in this quarter’s report is the residential construction sector, which recorded remarkable growth. Overall starts soared by 76% compared to the first quarter of 2025 and jumped 64% year-on-year.

This upturn was driven largely by private housing, which experienced a staggering 95% increase against the previous quarter and an 84% rise on the same period last year. Social housing also saw modest growth – up 11% quarter-on-quarter – though it remained 4% lower than 2024 levels.

One particularly significant project that helped boost the numbers was the £72.9 million Westland Heath development in Sudbury, Suffolk. The scheme will deliver 242 new homes, comprising 206 houses and 36 flats, and is emblematic of renewed appetite for large-scale residential investment.

Mixed Fortunes Across Non-Residential Sectors

While the residential sector powered ahead, the picture was more varied across non-residential construction. Starts in this category rose 21% compared to the previous quarter but remained slightly behind 2024 levels, down 3% year-on-year.

However, several verticals did post notable gains. Health sector construction increased by 41% over the quarter and was up 29% compared to the same period last year. Office developments also made strides, with starts rising 36% quarter-on-quarter and 8% year-on-year.

Hotel and leisure projects followed suit, growing by 9% over the quarter and 13% compared to 2024. The education sector saw a mixed performance, with starts up 31% over the last three months but still down 24% year-on-year. Retail remained subdued – up 5% over the quarter but down 24% against last year’s figures.

Civils and Infrastructure Still Lagging: UK Residential Construction

The civil engineering sector showed only modest quarterly improvement, rising 6% in Q2 2025, but the year-on-year numbers paint a less rosy picture with a 30% drop. Infrastructure work edged up 2% over the quarter but was down a significant 38% on the year. Utilities also showed inconsistency, growing 11% over the quarter but still 17% below last year’s figures.

Community and amenity projects dipped 4% from the previous quarter. However, they surged 53% year-on-year, indicating targeted social investment.

Regional Insights: Broad-Based Recovery Across the UK

The regional data tells a story of widespread recovery, with several areas outperforming expectations.

• West Midlands: A standout performer, with project starts jumping 78% over the quarter and soaring 83% year-on-year.
• North East: Activity rose 75% compared to Q1 2025, standing 26% higher than the previous year.
• North West: Starts climbed 72% over the quarter and were up 23% annually.
• South East: Driven in part by the £56.9 million Portchester Phase 1 scheme in Hampshire (180 new homes), this region posted a 53% quarterly increase and a 39% year-on-year rise.
• South West: Not far behind, construction starts were up 31% over the quarter and 26% year-on-year.

London’s performance was more subdued. Although the capital saw a 34% rise over the quarter, its figures were still 10% down on the previous year. Elsewhere, performance varied, with some regions experiencing moderate gains and others seeing mixed results.

Outlook: Signs of Sustained Growth – UK Residential Construction

Commenting on the findings, Allan Wilen, Economic Director at Glenigan, remarked that the pace of the rebound has exceeded industry expectations.

“It’s quite remarkable to see how quickly sentiment has shifted. Following a rather underwhelming end to 2024 and a cautious start to 2025, we’re now witnessing a tangible surge – particularly in residential starts. These figures affirm the projections made in our summer forecast,” he said.

Wilen also acknowledged the slower recovery in infrastructure and other non-residential sectors, noting that upcoming government initiatives and capital spending commitments could help catalyse further improvements.

“As public funds begin to be deployed and major projects receive the go-ahead, we expect to see broader gains across civil and infrastructure works.”

Final Thoughts

The July 2025 Glenigan Index paints a promising picture for UK construction. Buoyed by a vibrant residential sector and supported by encouraging developments across health, office, and leisure sectors, the industry appears to be regaining its footing. While challenges remain – particularly in civil engineering and infrastructure – the overall direction is unmistakably positive.

Regional activity is increasing, and the project pipeline is strengthening. As a result, construction professionals have growing confidence in the months ahead.