A recent analysis indicates stagnation in the construction sector until mid-2025, with inflation pressures anticipated to increase from 2026.
- Challenging market conditions are forecasted to persist into 2024, affecting both residential and commercial projects.
- Resource constraints and procurement delays have constrained the supply chain, impacting market competitiveness.
- The construction industry faces continued delays owing to Building Safety Act implications and political uncertainties.
- Commercial and public sector project delays are expected to prolong tough market conditions until mid-2025.
A recent analysis indicates stagnation in the construction sector until mid-2025, with inflation pressures anticipated to increase from 2026. According to a summer survey by Arcadis, the report highlights a potential inflation increase for residential and commercial construction projects, reaching 5-6 per cent between 2026 to 2028. This figure surpasses the previously projected 4 per cent forecasted in their spring report.
Challenging market conditions are forecasted to persist into 2024, affecting both residential and commercial projects. Arcadis suggests that the supply chain is being reshaped by resource constraints and delayed procurements, primarily caused by stalled two-stage procurements. Such constraints diminish market competitiveness and restrict the pursuit of new opportunities for contractors.
Resource constraints and procurement delays have constrained the supply chain, impacting market competitiveness. Contractors are reportedly stuck in a ‘holding pattern’, tied to resourcing uncertain projects due to prior commitments. Consequently, the number of available contractors has decreased, limiting bid opportunities.
The construction industry faces continued delays owing to Building Safety Act implications and political uncertainties. Data suggests a significant percentage of high-risk residential projects require second-staircase redesigns and are currently stalled under the Building Safety Act gateway-two rules. This situation contributes to the prolongation of difficult market conditions.
Commercial and public sector project delays are expected to prolong tough market conditions until mid-2025. Ongoing sluggishness in these sectors poses risks, compounded by the current general election campaign, which leaves the construction sector awaiting new governmental growth initiatives and investment priorities to provide a clearer direction forward.
The construction sector is expected to endure challenging conditions without significant improvement until mid-2025.
