UK Construction Industry Forecast for 2025
Businesses start gearing up for the new year many months before, looking for insights and predictions into what the coming year may hold. This helps companies to set the right expectations, plan the year, and stay competitive in the evolving market. A useful tool for many businesses, our UK construction industry forecast explores what the future may hold for construction in 2025 and beyond.
Is the construction sector forecast for UK companies looking optimistic? Is the building sector poised for growth or set in stagnancy? What is the future of the UK construction industry?
It’s natural to ask these and other questions, especially for a sector that contributes significantly to the growing economy. And on that note, let’s explore the UK construction industry forecast for 2025.
Construction Forecast for 2025
Let’s understand the UK construction industry forecast through a SWOT analysis.
Strengths: Expected Boom
After overcoming the recent economic downturn in the last few years, there’s a sense of optimism thanks to the increased number of new project starts, technological advancements, and supporting government policies.
The Glenigan Industry Forecast for 2024-25 predicts a comeback in the sector, fueled by increased confidence from the private sector and public investment.
The report predicts a rise of 8% in 2025 in projects valued under £100m, expected to increase to 10% in 2026. The reasons include better household incomes, improved economic conditions, and better political certainty, contributing to investor confidence in commercial and industrial property markets come 2025.
PWC’s Construction and Housebuilding Outlook report paints a positive picture of the sector in 2025, with 7% growth expected in the new-build residential sector and 2.9% growth overall. This shows confidence in renewed annual housing and renewed growth in repair, maintenance, and improvement work.
Weaknesses: Skilled Worker Shortage
The economy is showing signs of improvement over what was observed in 2023. However, the modest construction forecast for 2025 is due to the desperate need to fill skilled construction worker gaps. About 251,500 extra construction workers are needed by 2028 to meet the expected levels of work, according to a Construction Skills Network (CSN) report. If the employment needs are met, there will be 2.75 workers in the sector to fulfil project needs.
Labour typically contributes around 40% of project costs, and any shortfalls can increase labour costs, inflating overall construction budgets. Worker shortages can also lead to unexpected delays in critical projects, limiting their scope and potential to support the UK’s economy and society.
Brexit has had a cascading effect, reducing the number of available workers. A large portion of the skilled workforce is nearing retirement, and there’s an insufficient influx of younger workers to meet the shortfall.
Construction firms need to recoup and pre-plan their workforce needs, including their on-site needs. Higher wages and benefits may be required to attract and retain skilled workers. Proper welfare facilities can mitigate skilled worker turnover and promote their overall well-being on-site. Connect with Hireforce Welfare to learn how we meet this vital need.
Opportunities: Adopting New Initiatives
The UK construction industry will play a significant role in supporting the government’s commitment to meet net-zero carbon emissions by 2050. The importance of sustainability initiatives is non-negotiable in your 2025 construction growth strategy.
This initiative provides an opportunity and puts the onus on construction companies to embrace green building practices, energy-efficient designs, and sustainable materials in their projects.
As a key focus and construction forecast for 2025, building firms will need to follow stricter environmental norms and integrate renewable energy systems and waste reduction into projects. It may mean higher upfront costs for firms, but they promise lucrative long-term benefits, including lower energy consumption and higher property values.
The UK government may also bring about new regulations to reduce carbon emissions and improve building safety, which will shape the way construction projects are delivered in 2025.
Threats: Rising Material Costs
The cost of construction is increasing primarily due to the cost of building materials, and this trend is expected to continue through 2025. Previous years’ construction sector forecasts have indicated and observed price fluctuations in necessary materials like steel, concrete, glass and timber. Reasons include supply chain disruptions, increased demand, and environmental regulations.
Although sustainable materials meet green building regulations and are in line with the UK government’s net-zero goals, they often come with a higher price tag. Building contractors may need to rethink their sourcing strategies to balance the tightrope of rising material costs and meeting sustainability goals.
These factors will likely push the demand for sourcing recycled materials, which may lower costs in the long run.
Insights from this SWOT analysis can support a building and construction firm’s construction 2025 strategy and planning.
Hireforce Are a Reliable Partner for Your Construction 2025 Strategy
The overall UK construction industry forecast for 2025 is encouraging. Experts point to positive growth riding on improved economic conditions and growing demand. However, it’s vital to address lingering challenges, including a shortage of skilled workers, rising material costs, and meeting changing regulatory requirements to maintain the momentum of growth.
A comprehensive understanding of these trends and insights will help construction companies maintain their competitive advantage and plan for profitability in the upcoming year.
Hireforce Welfare, a unit of the Hireforce group, remains a reliable partner for many construction firms and contractors by providing high-quality worker welfare facilities through our range of towable welfare cabins.
Contact us to learn more about how our welfare range can contribute to your project's success in 2025 and beyond.