The UK construction industry enters 2025 with the cautious optimism driven by the government-backed infrastructure programs, the net-zero carbon goals along with the technological advancements. Despite the recent economic headwinds, the sector is expected to show resilience and moderate growth especially in areas of the infrastructure development and even the digital transformation.
Economic Forecast and Market Dynamics
According to the latest Construction Products Association (CPA) forecast, the UK construction output is projected to grow by 2.1% in 2025, following a slight contraction in 2024. Several market forces are shaping this outlook:
- Ongoing government investment in the infrastructure and housing
- Transition to the low-carbon buildings and retrofitting
- Accelerated adoption of the digital construction methods
- Persistent challenges including the labor shortages and material inflations
Housing Construction Market
The UK housing market continues to be a mixed bag. In 2024, the private housing construction experienced a downturn of 15% which was primarily due to the higher interest rates and weakened consumer confidence.
However, 2025 is projected to see a modest rebound with the private housing expected to rise by 4%. This is driven by the improved mortgage availabilities as well as the stabilized interest rates.
On the public side, affordable housing remains a key focus. The UK government’s Affordable Homes Programme (2021–2026) commits £11.5 billion to deliver up to 180,000 new homes. As local authorities and housing associations push for sustainable housing, the developers are turning to modern methods of construction as well as towards the digital tools like BIM to streamline the designs and reduce the costs.
Non-Residential Construction Market
The non-residential sector in the UK is forecasted to grow by 2.4% in 2025 bolstered by the public sector investments and a resurgence in commercial developments.
Key areas of growth includes:
- Healthcare: The New Hospital Programme which is a part of the government’s health infrastructure plan, targets the delivery of 40 new hospitals by 2030 with the several builds accelerating in 2025.
- Education: Government-funded education infrastructure continues to expand with over £1.8 billion that has been allocated for the school upgrades as well as for the new constructions in the 2025.
- Warehousing & Logistics: Driven by the e-commerce boom, the industrial and logistics construction remains strong with the demand for the modern, automated warehousing facilities growing steadily.
- Offices: While the demand for traditional office spaces remains subdued, retrofitting and ESG-compliant office’s refurbishments are gaining traction and that too particularly in the major cities like London and Manchester.
Non-residential projects are increasingly benefiting from the use of the BIM for Infrastructure services especially in the hospitals, schools and the logistics hubs. BIM ensures the precision in planning, cost estimation along with the sustainability compliance which is crucial for both new builds as well as for the refurbishments.
Infrastructure: A Core Growth Engine
Infrastructure remains a priority for the UK government with the major projects like HS2, road upgrades and energy grid improvements pushing forward. The National Infrastructure and Construction Pipeline outlines over £700 billion in the planned investments over the next decade with a significant portion slated for 2025.
This growth in infrastructure projects is also accelerating the adoption of BIM for Infrastructure — a powerful tool for improving planning, collaboration and long-term asset management. BIM not only supports the design and construction but also facilitates lifecycle analysis thereby helping to ensure that the assets meets the future performance standards and even the compliance needs.
Sustainability and the Net Zero Mandate
With the UK legally committed to achieving net zero emissions by 2050, the sustainable construction will dominate the project priorities in 2025. More than 70% of UK construction firms says that sustainability now plays a major role in winning contracts, according to a 2024 RICS report. According to The Access Group, sustainability remains a top concern, with the global sustainability in construction market projected to grow at a CAGR of 8.91% from 2024–2031.
Digital construction tools, including BIM supports the green construction through accurate energy simulations, material tracking and carbon footprint reduction. Lifecycle analysis with BIM is becoming an industrial standard.
Technology & BIM Adoption
The construction industry is undergoing a digital revolution to address challenges and improve efficiency.
Key technological trends includes:
- Building Information Modelling (BIM): Enhances collaboration, reduces reworks, and increases transparency across project stakeholders.
- ERP Systems: Tools like Access COINS helps to manage projects more efficiently, reduces the risks and improves teh data accuracy.
To meet the increasing demand and address the local skill shortages, many UK firms are exploring BIM Outsourcing Services, providing access to the experienced professionals without any extensive in-house investments.
Final Thoughts
The UK construction market in 2025 is poised for the stable recovery and innovation-led growth. While challenges remains, the strategic investments in infrastructure, housing as well as the digital transformation especially through BIM will be the key to shaping the future.
The AEC firms that embraces the sustainability, technology and collaborative delivery models will be best positioned to navigate the evolving landscape and lead the way forward.
Want to lead the way in the changing UK construction landscape?
Partner with QeBIM for cutting-edge BIM solutions and reliable BIM outsourcing services that drives efficiency, accuracy and growth.
