Winter forecasts from the 色猫直播 Products Association (CPA) reckon that overall construction output will rise by just 1.7% in 2026, a significant downgrade from the 2.8% growth that it was forecasting just three months ago in October.
Firms operating across the construction supply chain have all reported that the slowdown in activity in key sectors has persisted since spring 2025.
According to the CPOA, weak fundamentals and geopolitical developments are keeping decision-makers risk-averse and lengthening the period of uncertainty that is holding back growth in the private housing, private housing repairs, maintenance and improvement (RMI) and commercial sectors. In addition, as in 2025, there remains an array of risks that could have a major impact on near-term forecasts for each construction sector and sub-sector.
In private housing 鈥� the largest construction sector 鈥� there is little to suggest a large increase in house-building activity this year. For house-builders, there is an increasing trade-off between buyer affordability and development viability. In areas where demand has been sustained, properties are affordable, but site viability has been affected by a growing list of additional costs imposed by the government, especially for smaller house-builders. In areas where site viability has been maintained due to higher house prices, demand and affordability remain the key constraints. An increase in current house-building volumes would require a sharp rise in demand during the key spring selling season for the major house-builders, the CPA says, and this appears unlikely in the absence of demand-side stimulus. Private housing output is forecast to grow by only 1.5% in 2026, revised down from a forecast of 4.0% three months ago.
Private housing RMI is the second-largest construction sector and activity was subdued throughout 2025, despite a sustained period of real income growth, reductions in interest rates and households with accumulated savings. Therefore, the sector鈥檚 outlook is heavily dependent on when homeowners who have the finance available feel confident enough to spend on home improvements. Furthermore, activity will be negatively affected by the government鈥檚 announcement in the autumn budget that the ECO programme of energy-efficiency improvements to existing homes will now finish in March 2026 and measures included in the Warm Homes Plan are unlikely to lead to notable growth in the near-term, the CPA says. Overall, the forecast for private housing RMI output has been revised down to a contraction of 1.0% in 2026, marking a second year of decline.
In infrastructure, the third-largest construction sector, activity remains strong, driven by energy generation and distribution and increased investment in water infrastructure with the start of the AMP8 regulatory period. This is balanced with work at Hinkley Point C passing its peak, concern that the HS2 鈥榬eset鈥� will delay near-term rail activity and the gap in the roads pipeline that is forming, given a cut in nominal funding and a lack of detail on the next Road Investment Strategy period (RIS3), which is due to start in April. Overall, infrastructure output is forecast to rise by 3.9% in 2026, unchanged from the Autumn 2025 forecast publication.
CPA head of construction research Rebecca Larkin said: 鈥淲e 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. However, there are two main primary questions remaining. Firstly, when will confidence improve enough to see homebuyers, homeowners and investors press ahead with large spending decisions and drive a pickup in house building, home improvements and large private sector projects. Secondly, will government introduce a much-needed policy to enable demand in a housing market and house building sector given that affordability remains a key constraint? Until then, the 1.7% growth that is forecast for construction is pinned on niche areas of activity such as commercial fit-out and refurbishment, infrastructure work on energy and water networks, as well as the effective delivery of public sector building programmes for schools, hospitals and prisons.鈥澛犅�