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Glenigan Review: Mixed Signals in UK Construction as Contract Awards Rise But Starts Fall
Glenigan | A Hubexo Product (Glenigan), one of the construction industry’s leading insight and intelligence experts, has released the October 2026 edition of its Construction Review.
The October Review focuses on the three months to the end of September 2026, covering all major (>£100m) and underlying (<£100m) projects, with all underlying figures seasonally adjusted.
It’s a report providing a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the past year.
Whilst the latest official figures indicate the economy as a whole is growing, construction output was the weak spot, recording a decline of 0.5%1. According to the October Review, Glenigan’s data reflects this downturn, showing a sector experiencing considerable turbulence, with activity weakening across all three key indicators.
Detailed planning approvals fell 16% against the preceding three months, highlighting a sizeable reduction in the value of projects progressing to the start of the pipeline. Main contract awards dropped 19%, and project starts declined 26%, representing the steepest fall of the three indicators, with fewer schemes commencing on site.
Year-on-year performance was generally subdued with detailed planning approvals 28% lower than a year earlier, and project starts fell 21% year-on-year, indicating weaker development activity across several sectors. Planning departments are still under strain from budget cuts and staff shortages.
However, main contract awards provide a sole bright spot amidst the gloom, bucking the downward trend with an impressive uptick of 25% year-on-year, supported by major project commitments and higher-value schemes entering the construction pipeline.
There is a number of reasons the sector is struggling to shake off the persistent malaise, with private housing helping to drag down performance as households feel the squeeze. Struggling against a 3.3% inflation rise in August, unemployment edging up to 4.9% and wage growth slowing to 3.9%, the slowest since 2020, there’s little appetite whether it’s buying, selling or building. This has been partially offset by a 165% surge in social housing year-on-year, which has largely driven growth, it’s just not enough to put this vertical back in the black.
Further afield, other public sector pipelines are holding up better. Education planning approvals climbed 60% year-on-year, and community and amenity approvals surged 200%. These stronger figures point to the implementation of pre-approved Government spending plans being implemented across key areas of critical infrastructure. In contrast, other private sector verticals crashed, with office and industrial starts both slumping 55%, representing a complete reversal in fortune compared to H.1 2026. Likewise, civils approvals plunged 70%, a sharp fall that weighs heavily on the overall figures and indicating a warning sign for the months ahead.
With these frustratingly low figures, many in the industry are now looking ahead to the Budget, where decisions on public spending and infrastructure will help shape investment plans. However, external forces will continue to moderate Government intentions with rising costs, changes in interest rates and mortgage costs continuing to shape how quickly projects move forward.
Commenting on the October 2026 Construction Review, Allan Wilen, Economics Director at Glenigan says: “Rising contract awards show intent and suggest confidence is returning to parts of the market, telling us schemes are being planned and funded, but the work has not reached the ground yet. Too much of the market still rests on a small number of large projects. If one of them slips, the whole sector feels it and a market that relies on a handful of big schemes is fragile. A genuine recovery needs to be seen across smaller, underlying schemes, valued under £100 million, too few of these are currently moving forward.
“Both the public and private markets are under pressure. Private developers are facing tariffs, taxes and higher interest rates, while public spending plans remain uncertain. Developers and contractors are waiting to see what the Budget means for households and businesses and promised government investment. The Budget could be the most significant since Osborne’s austerity Budget and we will be watching it closely to assess how it could impact our recovery predictions for 2027.”
Exploring each sector in more detail…
Residential: social housing leads as private demand weakens
According to Glenigan’s data, across the whole sector, project starts saw a modest decline of 3% on last year but rose on the previous quarter driven by major projects. Main contract awards jumped 22% year-on-year, supported by growth in underlying projects, although awards eased against the previous three months. Detailed planning approvals rose 2% on last year, which points to modest improvement in the medium-term pipeline.
Residential activity weakened over the period, but social housing stood out. Social sector housing starts accounted for the largest share (47%), surging 165% year-on-year to £5,049 million. Private housing fell 34% against the previous year to £3,252 million, while private apartments plunged 52% to £1,235 million. Falling house prices and higher mortgage rates are holding back private buyers, and that is unlikely to change until borrowing costs ease.
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Yorkshire & the Humber led residential starts at £4,427 million, largely due to the £4,086 million Leeds City Centre Heat Network project. London came second at £1,239 million, despite declining 42%. The North West grew 27% to £1,144 million, and Northern Ireland enjoyed a strong spell, more than doubling to £296 million. Most other regions saw declines.
Non-residential: weak starts, mixed signals ahead
Non-residential starts fell across the board. Office project starts dropped 55% year-on-year and main contract awards fell 38%. Detailed planning approvals climbed 19%, which suggests a recovering future pipeline. Projects worth £50 million to £100 million were the only growing value band, up 26% year-on-year to £455 million. Projects over £100 million plummeted 79% on last year to £410 million. London dominated office starts at £908 million, almost two-thirds of the total, despite a 64% fall on the previous year.
Retail starts fell 26% and planning approvals slipped 2%, although contract awards surged 52% year-on-year. Supermarkets were the exception increasing 31% year-on-year to £191 million, giving them a 79% share of retail starts. Shops fell 74% against the previous year. London was the largest retail market during the period at £34 million, although activity decreased 7% compared with last year. The South West followed at £31 million, rising 50%, while Yorkshire & the Humber recorded the strongest growth, increasing 57% to £21 million.
Hotel and leisure starts decreased 51% and contract awards dropped 39% on last year. Planning approvals grew 22%, which suggests the future pipeline could strengthen even as current activity stays weak. Hotels and guest houses grew 10% year-on-year to £420 million, while indoor leisure facilities fell 68%.
Public sector: health awards surge, education approvals climb
Glenigan data reveals that Health starts fell 24% year-on-year, but main contract awards soared 1,517%. The sector is supported by major healthcare investment programmes and ongoing capital expenditure commitments, which are expected to sustain construction activity and underpin future workloads. Planning approvals fell sharply (-44%) on the previous year, though a 14% rise on the quarter hints at some stabilisation. Hospitals made up 46% of starts, rising 5% year on year. The South West led starts at £217 million, up 32% on the previous year, while London had the largest planning approvals at £333 million.
Education starts fell 35% against the previous year, but contract awards rose 15% and planning approvals climbed 60%. Schools dominated activity, accounting for almost four-fifths (79%) of total starts, despite a 37% fall against last year. University projects represented the second largest area of activity, rising 218% year-on-year and accounting for 15% of starts. Regionally, Wales, accounting for £165 million, led the way delivering exceptionally strong growth of 649%. The forward signals in education are stronger than its starts suggest, offering a counterweight to the wider gloom.
Community and amenity had a mixed period. Starts rose 3% on last year, although contract awards fell 55%. Planning approvals jumped 200%. Military projects made up 39% of starts, worth £201 million, while prisons rose 123% to £182 million. Blue light projects fell 33% to £81 million. The West Midlands led regional starts at £227 million, mostly due to the £159 million Defence Estates Optimisation Programme at Beacon Barracks, Stafford.
Civils and infrastructure: near-term dip, long-term investment
Civil engineering starts rose 6% year-on-year, but main contract awards fell significantly (-74%) and detailed planning approvals plummeted 70%. Starts fell 68% on the previous quarter.
Roads made up 30% of starts, up 49% on last year. Energy fell 48% and made up 18% of starts. Harbour and port projects grew 115% accounting for 7% of the total value. The West Midlands led starts at £506 million, up 250%, and the North West followed with £471 million, up 382%. Scotland recorded £399 million, below last year’s level. The East Midlands had the highest planning approvals at £1.21 billion, up 286%.
Industrial activity weakened considerably. Project starts fell 55% against the previous year and main contract awards dropped 48%, although planning approvals eased recording a modest decline of 6%. Manufacturing starts fell 55% year-on-year to total £868 million, while warehousing and logistics dropped 51% to £466 million. The East Midlands was the most active region, with starts up 167% to £255 million.
Longer-term prospects remain supported by planned investment in transport, utilities, energy and environmental infrastructure. Whether that investment reaches site on time will indicate how quickly a recovery comes.
