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Construction carnage

ended 13. March 2026

A major drag on the dire GDP data published this morning, showing zero growth in January, and a meagre 0.2% over the three months to the end of January, was construction. Output in the construction sector fell by 2.0%, following falls of 2.1% in the three months to December and of 0.9% in the three months to November 2025. Liz McKeown, Director of Economic Statistics, ONS, said: “There was another large fall in the construction industry in the latest three months, with continued contraction in housebuilding.”

Meanwhile, one of the largest negative contributions to growth at the subsector level in the three months to the end of January was real estate activities (down 0.2%), driven by falls in real estate activities on a fee or contract basis (down 7.1%) and buying and selling, renting and operating of own or leased real estate, excluding imputed rent (down 0.7%).

Couple of Qs:

  • Can we officially declare the government's housing target of 1.5m new homes dead?
  • Was the late Autumn Budget the cause of abject real estate activities data?

Any other thoughts, specifically on construction and transactions ('activities'), ASAP please. Story being written NOW.

5 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
Scheduling a late budget, combined with the 101 leaks of potential tax changes, made it difficult for home movers and first-time buyers to make their most important decisions, which is a driver of the fall in real estate activity. Instead, sitting on hands became an unwanted pastime. And when the budget finally delivered nothing for homemovers, it was too late for anyone to feel interested as the festive season had already started. Time and time again poor decisions from our beleaguered government, it’s time to take action before a recession takes hold of the UK.
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Rohit Kohli
Director at The Mortgage Stop
The 1.5 million homes target was dead in the water almost from the moment it was announced, because there was never a credible delivery plan behind it. Since then, policy and budget decisions have only made things worse. Builders are facing higher employment costs, more regulation and weaker investor demand, especially as landlords and investors pull back. In that environment, many developers are more inclined to sit on land than build into uncertainty. So the drop in construction output and real estate activity should not surprise anyone. In effect, the government has produced exactly the slowdown its own policies were always likely to trigger.
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Martin Rayner
Financial Adviser at Compton Financial Services
The government’s housing target may not be officially dead, but it is certainly on life support. Each month of weak construction data makes the goal harder to achieve and, unless activity improves meaningfully, it may only be a matter of time before the target is quietly revised or abandoned.

Uncertainty has also played a major role in slowing the property market. In the run-up to the Autumn Budget there was widespread speculation about potential changes such as mansion taxes or new taxes on gains from primary homes. That kind of policy ‘kite-flying’ can be very damaging to market confidence.

When buyers and sellers believe the rules may change, many simply pause and wait. That hesitation slows transactions and ripples through the wider housing and construction sectors, which is exactly what we are now seeing in the data.
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Editor
Tony Redondo
Founder at Cosmos Currency Exchange
This government’s 1.5m housing target is as dead as the “Dead Parrot” in the 1969 Monty Python sketch. To hit 300,000 homes annually, we need a surge that today’s data flatly contradicts. With construction output down 2.0% and private housing starts cratering, the gap between political ambition and site-level reality is a Grand Canyon-sized chasm. The Autumn Budget was a clear chilling factor. The 7.1% slump in "fee or contract" activities highlights a "wait-and-see" paralysis among buyers and surveyors. While the Budget didn't cause the structural slowdown, the tax uncertainty regarding property income and high-value surcharges effectively froze the pipeline. Interestingly, while new work fell, "repair and maintenance" grew by 3.3%. We’ve become a "make do and mend" economy.
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Michelle Lawson
Director at Lawson Financial
An unrealistic and unachievable target to build 1.5m homes was a disaster to announce I. The first place. Given that no government has met their target it was a guaranteed non starter. Developers charge top money for a house made of poor quality. You can read disappointed and frustrated buyers’ comments quite easily. There isn’t a shortage or properties, there’s a shortage of usable properties and a hell of a lot of empty/derelict ones. Tax breaks to develop those would encourage investors, smarten up roads, fill another home.
The costs of materials is rocketing and employment hires soaring. This isn’t pleasant or encouraging and doesn’t makes this surprising.