Housing snapshot: Short-term gains against a cautious outlook

New data from Glenigan reveals a mixed outlook for housebuilders and housing contractors in the UK residential construction market.

While project starts are showing solid gains, both detailed planning approvals and main contract awards have declined, suggesting a possible slowdown ahead. The sector continues to face economic headwinds, and although current activity appears robust, forward-looking indicators warrant a more cautious interpretation.

Housing Project Starts: A Short-Term Boost

In the three months to April, residential project starts increased significantly, both year-on-year and against the previous quarter. This uptick signals healthy near-term activity for housing contractors and suggests improved site mobilisation and delivery in early 2025.

The timing of this growth may be partially influenced by external factors, notably the rush to complete transactions before the April stamp duty changes. Following this period, indicators such as UK house prices, which declined by 0.6%, and falling mortgage approvals point to a more subdued market backdrop.

Planning and Contract Awards Weaken

While project starts offer some optimism, the decline in the development pipeline is notable. Both detailed planning approvals and main contract awards fell on a quarterly and annual basis. This suggests a softening in the longer-term project pipeline for developers and contractors.

These figures reflect an increasingly cautious investment environment. Slower planning activity could lead to reduced build volumes in the latter half of the year, even as current starts progress on-site.

Regional Trends: Strength Beyond the Capital

Regionally, performance varied. London maintained its lead in total residential project starts, recording £2.14 billion, despite a 15% decline. Notably, the East Midlands and North East recorded the most significant growth across UK regions.

Housing Types: Private Sector Leading the Way

Private housing remains the dominant force in the UK residential sector. It accounted for 50% of all project starts during the quarter, with values rising 37% year-on-year to £6.72 billion. Growth was also evident in:

• Private apartments, up 17% to £2.72 billion
• Social housing, matching the 17% growth to reach £1.98 billion

However, not all sub-sectors shared in the growth. Three residential categories experienced year-on-year declines, underlining that market recovery remains uneven across different housing formats.

Types of Housing Projects Started – Three months to April 2025

Source: Glenigan

Contractor Performance: Market Leaders in Focus

Despite uncertainties in planning and contract flows, a number of top-performing housing contractors continue to secure major projects across the UK.

Housing Contractors League Tables May 2024 to April 2025

Source: Glenigan

Sector Summary

The UK housing sector has delivered a strong performance in terms of project starts, boosted in part by time-sensitive completions and continued demand in core regions. However, the decline in planning approvals and contract awards points to a more restrained development outlook in the coming months.

Interest rates, falling house prices, and reduced mortgage activity remain key factors influencing developer confidence and investor sentiment. For housebuilders and housing contractors, the landscape remains dynamic, with opportunities continuing to emerge, particularly in regions outside London and across a diversified range of housing types.

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