{"id":165751,"date":"2026-09-16T10:46:46","date_gmt":"2026-09-16T09:46:46","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=165751"},"modified":"2026-09-16T10:46:46","modified_gmt":"2026-09-16T09:46:46","slug":"residential-weakness-weighs-construction-despite-commercial-resilience","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/residential-weakness-weighs-construction-despite-commercial-resilience\/165751\/","title":{"rendered":"Residential weakness weighs on construction despite commercial resilience"},"content":{"rendered":"

Drilon Baca, economist at Glenigan, discusses the results of the Glenigan Construction Index and how construction is looking after a disappointing Summer<\/h2>\n

Summer 2026 was supposed to lift construction’s mood, it failed to do so. The bounce many hoped for did not arrive, and the sector has spent another three months struggling to gain traction against stubbornly high borrowing costs, cautious investors and a fresh cabinet still finding its feet.<\/p>\n

The latest Glenigan Construction Index reveals that construction activity remains under pressure, with a sharp downturn in residential project starts continuing to weigh heavily on overall performance. While it’s true that commercial sectors, particularly offices and industrial, are showing encouraging resilience and civil engineering activity has strengthened, this has not been sufficient to offset the drag from a subdued housing market. Overall, the value of projects starting on-site declined 2% against the preceding three months and stood 20% below last year’s level.<\/p>\n

The sharpest drops may be behind us, but there’s still a big hill to climb before the longed-for recovery comes into view.<\/p>\n

Housing downturn remains the industry’s biggest challenge<\/h3>\n

The most significant weakness continues to originate from the residential sector. During the three months to August, residential project starts fell 15% against the preceding three months and were 36% lower than a year earlier. The scale of this decline highlights the extent to which housing market uncertainty continues to constrain construction activity.<\/p>\n

Developers remain cautious about bringing forward new schemes, focusing instead on progressing existing developments and managing sales rates on current sites. Weak house sales and higher construction costs are part of the story, but the impending building safety levy is giving developers fresh reason to pause. The resulting slowdown in new project commencements has significantly reduced overall industry activity and remains the principal factor behind the headline index weakness.<\/p>\n

Private and social housing both retreat<\/h3>\n

Private housing starts declined 8% against the preceding three months and stood 37% below last year’s level. Even as it remains the largest single element of residential activity, private housing is stuck in reverse. Meanwhile, social housing experienced an even sharper contraction, falling 29% quarter-on-quarter and declining 30% compared with a year earlier.<\/p>\n

The deterioration in social housing<\/a> activity underlines the challenge facing policymakers seeking to expand affordable housing supply. Here though, there is a reason for cautious hope. Number 10’s renewed commitment to housebuilding, and any new public spending in the autumn budget, could start to shift the mood for social housing in the coming months. Whether that turns into actual on-site activity is another matter.<\/p>\n

A recovery in residential construction will depend not only on improved market confidence among prospective homebuyers but also on the successful delivery of public housing investment programmes. Until housing activity begins to revive, overall construction growth is likely to remain constrained.<\/p>\n

Office and industrial sectors provide support<\/h3>\n

Against this challenging backdrop, non-residential activity has offered some encouragement. Project starts in the sector rose 6% against the preceding three months and stood 1% ahead of a year ago, demonstrating that businesses continue to invest despite wider economic uncertainty. These are the small shoots of revival the industry badly needs to see.<\/p>\n

Office market enjoys strong resurgence<\/h3>\n

The office sector delivered one of the strongest performances in the latest period, with project starts surging 61% against the preceding three months and standing 44% higher than a year earlier. Activity was boosted by several major schemes, including the \u00a399 million West One development in London.<\/p>\n

Demand for high-quality office accommodation continues to support investment decisions. Occupiers increasingly prioritise modern, sustainable buildings capable of meeting evolving workplace requirements, while developers are responding with both refurbishment and new-build projects. This trend has provided a much-needed source of momentum for the commercial construction market. There is, however, one note of caution. With office occupancy rates still low, the question arises: How long will developers keep backing new schemes?<\/p>\n

Industrial demand remains resilient<\/h3>\n

Industrial construction also recorded a strong performance, with starts rising 37% against the preceding three months. Although activity remained marginally below last year’s level, down just 2%, the sector continues to benefit from long-term demand for logistics, warehousing and distribution facilities.<\/p>\n

The sector’s resilience demonstrates that investors remain prepared to commit capital to developments linked to structural growth trends, even as wider economic conditions remain challenging.<\/p>\n

Mixed fortunes across public sector construction<\/h3>\n

Elsewhere, the picture across publicly funded construction remains mixed. Health project starts declined 7% against the preceding three months but remained 17% higher than a year ago, making health one of the few sectors to deliver annual growth.<\/p>\n

Community and amenity projects also strengthened, rising 11% compared with the previous three months, although activity remained 9% below last year’s level.<\/p>\n

Education, however, experienced a particularly weak period. Starts fell 38% against the preceding three months and were 25% lower than a year ago. This suggests that increased public spending commitments have yet to translate into a sustained pipeline of education projects commencing on-site.<\/p>\n

Civil engineering shows signs of recovery<\/h3>\n

Civil engineering activity strengthened during the latest period, rising 23% against the preceding three months. However, starts remained 24% below last year’s levels, highlighting that the sector still has ground to recover.<\/p>\n

Infrastructure drives improvement<\/h3>\n

The recovery was led by infrastructure work, where project starts jumped 40% against the preceding three months. Although activity remained below year-earlier levels, the improvement suggests that previously planned schemes are increasingly progressing through to construction.<\/p>\n

Utilities work also moved higher, rising 5% quarter-on-quarter. While activity remains below last year’s level, the sector is expected to benefit from growing investment requirements across key utility networks in the medium term.<\/p>\n

Reasons for cautious optimism, but housing remains the missing ingredient<\/h3>\n

The September Glenigan Index<\/a> presents a challenging picture, particularly for residential construction, but there are grounds for cautious optimism. Commercial construction has proved remarkably resilient, with offices and industrial projects delivering strong growth, while civil engineering activity has begun to recover from recent lows.<\/p>\n

Nevertheless, housing remains the industry’s missing ingredient. Until market conditions improve sufficiently to encourage developers to bring forward significantly more residential projects, overall construction activity is likely to remain subdued. A stronger housing market would not only revive private-sector housebuilding but also support wider growth across the construction sector and boost the broader economy.<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

Drilon Baca, economist at Glenigan, discusses the results of the Glenigan Construction Index after a disappointing Summer.<\/p>\n","protected":false},"author":32,"featured_media":165752,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[908,173154,173386],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-165751","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-planning-construction-news","8":"tag-economy","9":"tag-exclusive","10":"tag-glenigan"},"acf":[],"yoast_head":"\nResidential weakness weighs on construction despite commercial resilience<\/title>\n<meta name=\"description\" content=\"Drilon Baca, economist at Glenigan, discusses the 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