Construction Starts Edge Higher Starting 2025 on Positive Note

CONSTRUCTION STARTS have started 2025 on a positive note, according to Glenigan’s January 2025 Construction Index.

Despite the value of project-starts apparently declining in the final three months of the year, they rose by 2% compared to Q3, when seasonally adjusted.

Encouragingly, some verticals also rallied, especially private residential construction. This micro-sector contributed to a 7% overall residential sector increase in Q.4. In the non-residential sector, continued strong performance in Hotel & Leisure and a handful of other verticals were integral to overall growth of 3%.

Construction Project Starts

Glenigan’s Economic Director, Allan Wilen, said: “As expected, seasonal factors affected work commencing on-site during the final quarter of the year. However, after adjusting for the Christmas wind-down, starts managed to edge slightly higher during these three months. This was partly driven by a 9% rise in private housing projects, indicating that developers may be entering the New Year with renewed confidence.

“Declines in civil engineering and infrastructure starts, which weakened in Q4, indicate a degree of uncertainty persists regarding public sector funding. The Government’s Spring Spending Review is hotly anticipated, and many are waiting on updates for a number of major projects name-checked in the Autumn Budget Statement, as part of a wider package promised to kick-start construction activity.”

Sector Analysis – Residential

Residential construction starts increased 7% during Q.4 2024 but stood 3% lower than a year ago.

Private housing increased 9% against the preceding three months, starts were also 1% above 2023 levels.

Social housing performed poorly on both counts, with work starting on-site falling 1% against the preceding quarter, standing 17% down on the previous year.

Sector Analysis – Non-Residential

Non-residential vertical performance was mixed, despite posting overall growth against both periods.

Hotel & leisure continued rise, increasing 2% against the preceding three months to stand 30% up on the previous year.

Education project-starts also experienced a strong period, increasing 12% during Q.4 2024 to stand 22% higher than a year ago.

Industrial sector starts also had a positive Q.4, growing 8% against the preceding three months, and 30% against the previous year.

Office project-start performance was mixed, increasing 14% during Q.4 2024, yet finishing 28% lower than a year ago.

Poor Performance

Performance was poor across all other verticals, with community & amenity project-starts plummeting 23% against the preceding three months. Starts also tumbled 19% compared to the previous year.

Civils performance slumped by 29% in Q.4 2024, to sit 20% lower than a year ago. This can predominantly be attributed to a crash in utilities starts, which fell 50% against the preceding three months and 45% against the preceding three months. Infrastructure work decreased 10% against the preceding quarter but grew 5% compared with the previous year.

Regional Analysis

Regional performance was also mixed. The North East stood out, with project-starts increasing 88% during Q.4 to finish 5% up against the previous year.

The South East also experienced relatively strong growth, increasing by 11% against the preceding three months to finish 46% above 2023 levels.

The North West and Yorkshire both performed well against the previous quarter, with the value of starts increasing 27% and 11% during Q.4 2024. However, performance in both regions declined 5% against the previous year.

London experienced poor performance, with the value of starts decreasing 13% against the preceding three months and remaining 35% down against last year.

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