UK construction output growth in 2026 will be significantly weaker than previously expected, with the Construction Products Association (CPA) cutting its forecast to 1.7%, down from 2.8% projected in October.
In its Winter Forecasts, the CPA pointed to ongoing uncertainty, fragile confidence and subdued activity across major sectors. Since spring 2025, firms across the supply chain have reported a slowdown in core markets. Risk aversion among investors, businesses and households is expected to continue, weighing on private housing, private housing repair, maintenance and improvement (rm&i), and commercial construction.
Private housing – the largest construction sector – is now forecast to grow by just 1.5% in 2026, sharply reduced from 4.0% in the autumn outlook. According to the CPA, housebuilders face mounting pressure between buyer affordability and site viability. In lower-value markets, rising costs are squeezing margins, particularly for smaller developers. In higher-value areas, affordability constraints continue to dampen demand.
Private housing rm&i is expected to contract by 1.0% in 2026, marking a second successive year of decline. Despite real income growth, lower interest rates and accumulated savings, homeowners remain cautious about discretionary spending. The planned end of the Energy Company Obligation programme in March 2026 and limited short-term impact from the Warm Homes Plan are also expected to suppress activity.
Infrastructure remains comparatively resilient, with output forecast to increase by 3.9% in 2026, unchanged from the autumn forecast. Investment in energy generation and distribution, alongside higher water spending under AMP8, continues to underpin activity. However, this is offset by Hinkley Point C moving beyond peak construction, uncertainty surrounding the HS2 reset, and a gap emerging in the roads pipeline ahead of RIS3.
Construction Products Association Head of Construction Research Rebecca Larkin said: “We enter 2026 with little to suggest that the conditions that held back construction over the last 12 months are improving: slow economic growth, weak business and consumer confidence and risk aversion resulting in subdued activity in the major sectors of construction.
“With hopes of a recovery consistently dashed last year, firms in the construction supply chain are bracing themselves for another difficult year that is still laced with risks, challenges and uncertainty.”
Larkin said any growth next year is likely to be driven by niche segments such as commercial fit-out and refurbishment, energy and water infrastructure, and public sector programmes for schools, hospitals and prisons.
The CPA added that its projections remain subject to significant uncertainty, including ongoing concerns over the reliability of official construction output data published by the Office for National Statistics.
