UK Construction Market Report Q1 2026
Executive summary
I’m very pleased to be introducing our Q1 2026 UK Market Report, and my first in my new role as UK Managing Director.
Our report is grounded in unique survey data gathered directly from clients, contractors and consultants across the industry, giving us a real‑time, first‑hand picture of market sentiment and sector performance. This insight, paired with current national data, highlights a construction landscape facing both significant external pressures and emerging opportunities.
Our latest survey shows 50% of respondents view global conflicts as the biggest threat to the construction industry, with 65% concerned about the impact of the war in Iran on commodity shortages and price volatility. These anxieties reflect broader market conditions: ONS figures confirm that construction output fell by 2.0% in the three months to January 2026, marking the fourth consecutive quarterly decline, driven largely by a 6.3% fall in private new housing. The Glenigan Index similarly reports a 9% drop in construction starts, with residential starts down 24% quarter‑on‑quarter and 32% lower than a year ago.
Despite this softening, pockets of resilience remain. Repair and maintenance activity increased by 3.3% in January, supported primarily by micro‑builders navigating smaller‑scale workloads. Non‑residential starts rose by 6%, driven by utilities and civil engineering demand, mirroring our survey findings where respondents identified education, data centres and infrastructure as the strongest tendering opportunities.
Contractor behaviour continues to reflect caution: 85% reported declining at least one tender in Q1, underscoring selective work‑winning strategies and prolonged negotiation periods. This is reinforced by national analysis showing that residential delivery is being held back by affordability constraints and delayed investment decisions, even as future pipelines grow in other sectors.
Policy signals offer limited optimism. Fifty‑seven per cent of respondents said the Chancellor’s Spring Forecast did not instil confidence in the sector. Meanwhile, workforce pressures continue, with national data showing labour demand shifting away from housebuilding towards highly skilled civil engineering and utility roles.
Despite these headwinds, technological and infrastructure led growth remains a bright spot. AI driven demand, digital twins and major public programmes continue to create medium term opportunity. As always, Gleeds will continue to support clients with clarity and confidence as the market navigates a landscape which is complex, but still rich with opportunity.
AI driven demand, digital twins and major public programmes continue to create medium term opportunity.
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