UK construction sector optimistic for growth in 2025, despite ongoing financial constraints

The Royal Institution of Chartered Surveyors (RICS), has released its latest construction industry insights, highlighting a more promising outlook for the UK construction sector as it heads into 2025.

According to responses gathered from professionals across the UK, in terms of net balance, +28 of survey participants predict an increase in workloads over the next 12 months, matching sentiment seen in the previous quarter and highlighting sustained optimism for growth within the sector.

In particular, the infrastructure sector is expected to lead robustly. Although slightly lower than Q2’s projections, a net balance of +30 of respondents still anticipates increased activity in infrastructure development, reflecting the sector’s ongoing resilience.

Meanwhile, the private residential sector has shown a notable rise in confidence, with +26 of survey participants predicting growth, an improvement from the +12% average reported over the past four quarters. Additionally, private non-residential construction is projected to pick up momentum, supported by a net balance of +17 of respondents.

Despite these positive indicators, if we look across to employment, when asked where the industry is seeing its most significant skills shortages, respondents cited bricklayers (37%), carpenters (33%) and plumbers (33%) as the most depleted roles currently. Shortage of general labour (44%) was also highlighted as one of the top factors limiting construction activity.

However, the general outlook for employment remains positive with a net balance of +18% of survey respondents forecasting an increase in employment over the next year. Although slightly down from the previous quarter’s +23%, the expected increase in employment highlights a resilient demand for skilled professionals within the industry.

Financial constraints were cited as another top factor limiting activity (61%), In keeping with the still generally tight credit environment. That said, there seems to be scope for a modest improvement next year given anticipated cuts in policy interest rates, with a net balance of +11% of respondents expecting an easing in credit conditions.

RICS Senior Economist, Tarrant Parsons, commented: “These results show some encouraging signs of improvement for the UK construction industry as we move into the final quarter of the year.

"While growth prospects for the next twelve months appear to be brightening, challenges persist, particularly around tight profit margins across the industry and ongoing skills shortages. Industry professionals anticipate an improvement in credit conditions over the year ahead, which should provide a much-needed boost to industry confidence".