UK private housing output, one of the major economic drivers, is forecast to decrease by 10% in 2026, according to the Construction Products Association’s (CPA) latest forecast.
The new CPA Summer Forecast is another downward revision to the CPA’s forecasts – down from -7% in its Spring Forecast. Private housing output is forecast to remain flat in 2027, the same forecast as in Spring, but now from a lower level.
Private housing is the largest construction sector and housebuilders have begun to report that homebuyer demand has weakened sharply in recent months in line with the increase in mortgage interest rates since the Middle East conflict, says the CPA.
“This will exacerbate the issue of affordability, which was already a problem before the conflict, especially for buyers in areas of the country with higher house prices. In lower-priced parts of the country, house builders will have to deal with sharp cost increases when site viability is already an issue.
“A spike in construction product prices in the second half of this year will come on top of a list of additional regulatory costs imposed over the last few years, with the Building Safety Levy coming into force in October 2026 and the Future Homes and Buildings Standard, which will be implemented in March 2027.”
Total construction output year-to-date so far in 2026 has already fallen by 1.6%, according to the Office for National Statistics, even before the impacts of the conflict and the CPA now expects it to fall by 3.3% overall in 2026. Output is still expected to rise by 1.2% in 2027 but “the risks remain heavily on the downside”.
In the second largest construction sector – Private housing repair, maintenance, and improvement (RMI) – basic repairs and maintenance activities have largely continued as usual, but there has been limited activity in home improvement projects. Overall, the sector is forecast to fall by 8% in 2026 and remain flat in 2027.
There is still expected to be significant growth in infrastructure, the third-largest construction sector, given longer-term existing contracts, pipelines of activity and funding in place for future projects.
