Construction activity across the UK weakened further during the second quarter of 2026, with the latest Glenigan Index showing a continued decline in project starts and pushing expectations of a market recovery back to 2027.
The Glenigan Index, which tracks construction starts on projects valued at under £100 million, found the value of underlying work starting on site during the three months to the end of June fell by 15% compared with the preceding three months and was 38% lower than the same period last year.
Residential construction recorded the sharpest fall. Starts declined by 31% over the quarter and were 52% lower than a year earlier, with private housing the principal driver of the downturn. Private housing starts fell 40% compared with the preceding three months and stood 63% below 2025 levels, while social housing starts declined by 11% quarter-on-quarter and 18% year-on-year.
Non-residential construction provided a small offset to the wider decline, with project starts rising 3% over the quarter, although activity remained 17% below last year’s level. Office construction was the strongest-performing sector, increasing by 51% compared with the preceding three months and standing 8% higher than a year ago. Education projects also recorded growth, rising 17% over the quarter and 7% year-on-year, while health starts increased by 2%, though remaining 28% below 2025 levels.
Civil engineering also remained under pressure. Work starting on site fell by 19% compared with the preceding three months and was 45% lower than a year earlier, with infrastructure starts down 28% quarter-on-quarter and utilities declining by 7%.
Allan Wilen, Economic Director at Glenigan, said the sharp decline in residential projects reflected the impact of the Iran War on consumer confidence, with developers adjusting their programmes in response to a slowing housing market. He said stronger office, health and education activity had helped offset weakness elsewhere, but warned that the impending change of Prime Minister could add further uncertainty and disrupt the rollout of departmental investment programmes.
Despite the challenging outlook, Wilen said Glenigan’s forecasts indicate that, while 2026 is expected to end in negative territory, construction should return to growth next year as economic conditions improve, inflationary pressures and interest rates ease, and funding from the Spending Review grows, with a larger recovery anticipated during 2027.