Glenigan Index of construction starts to end of February 2025

Pockets of regional resilience do little to offset faltering confidence

• The value of underlying work starting on-site during the three months to February decreased 6% and remained 17% below 2024 levels as activity remains relatively stagnant
• Lowered expectations on economic recovery dent residential construction, with starts down 10% on the preceding three months, slashed by 14% against 2024 figures
• Non-residential project starts decreased 2% against the preceding three months to stand 18% down on a year ago as Government keeps funding cards close to its chest
• Regional outliers include The South West and Northern Ireland which posted significant increases in start activity during the Index period compared to 2024 figures

The March edition of the Glenigan Index reveals that, following a relatively strong performance in last month’s Index period, the sector has once again slipped back, with the value of starts on-site dipping 6% over the three months to the end of February to finish almost a fifth (-17%) lower than 2024 figures.

This can be attributed to the ongoing uncertainty around current public spending intentions, as contractors and developers keep their powder dry until the Government’s full spending plans are disclosed in Q.2 2025.

Lukewarm private sector investment is also having a negative effect on start-rates. The housebuilding vertical, which appeared so robust in February’s Index has seen a reversal in fortunes.

According to Glenigan Economic Director Allan Wilen, “The drop-off may reflect a scaling back of expectations regarding the timing and strength of the economic upturn, consumer spending, and the housing market this year. Whilst housing market activity and prices have picked up in recent months, momentum is likely to slow once the new Stamp Duty regime kicks in from April. Financing issues, especially unfavourable credit conditions, also appears to be a factor, especially for smaller housebuilders.”

Certain non-residential sectors, particularly hotel & leisure, are still getting to grips with the minimum wage and employer national insurance increases. These two policies, unpopular in the UK business community, will likely dull the appetite for putting shovels in the ground as budgets continue to be adjusted around them. On the other hand, the Industrial sector had a particularly healthy Index period, alongside the health and community and amenity sectors, however these numbers remained disappointing when measured against last years’ results.

There were a couple of bright spots appearing amid the overall gloom, with some regional performance bucking the overall downward trend. The South West and Northern Ireland posted particularly strong results due to multiple projects kicking-off simultaneously during the Index period.

Considering the general outlook, Allan Wilen, adds, “The widespread decline in project starts during the three months to February will come as a disappointing news across a sector continually teased with the prospect of revived fortunes. This latest downturn appears to reflect faltering consumer and business confidence combined with the disruption of public sector capital programmes. Whilst the Chancellor increased capital funding for key departments for 2025/26, the current decline in project starts underlines the need for a rapid deployment of the promised funds from April.”

Taking a closer look at the sector verticals and regional outlook…

Sector Analysis – Residential

Residential construction experienced a disappointing Index period, overall. Starts on-site decreased 10% compared to the preceding three months, dropping 14% compared to 2024.

Drilling deeper, private housebuilding registered a 10% fall in the three months to the end of February, 12% down against the same period last year. Likewise, social housing construction fared no better, plummeting by almost a quarter (-24%) compared to 2024 and by 12% during the Index period.

Sector Analysis – Non-Residential

Industrial project-starts performed well, rising by half (50%) against the preceding three months and a modest 1% compared with the year before. Community and amenity also increased 10% against the preceding three months, yet stood 11% down against the previous year.

It was a similar story for health and retail, increasing 29% and 8% against the preceding three months respectively, but falling 18% and 37% against the previous year.

Hotel & Leisure experienced a poor period, decreasing 29% against the preceding three months to stand 14% down on the previous year. Education also disappointed, decreasing 31% against the preceding three months to finish 25% lower than the previous year. Likewise, offices experienced a poor period, declining 20% against the preceding three months and declining 28% against the previous year.

Civil engineering starts slowed down significantly, declining 4% against the preceding three months and decreasing 30% against the previous year. Looking a little closer, infrastructure starts decreased by a fifth (-21%) against the preceding three months, tumbling 29% compared to the previous year. In turn, utilities starts experienced a mixed performance, whilst increasing 22% against the preceding three months, they remained a third (-33%) down against 2024 figures.

Regional Outlook

Northern Ireland was the standout performer, with activity rising 44% against the preceding three months to finish a staggering 76% up on the previous year. The South West also experienced a strong Index period, increasing 15% against the preceding three months and rising by 18% on the previous year.

The North East experienced a mixed performance, increasing 11% against the preceding three months yet standing 10% down against the previous year.

London and the South East experienced project start declines, cascading 9% and 21% against the preceding three months, respectively. Both regions plummeted by 40% and 14% compared to the previous year.