Many experts within the construction industry are signalling for a renewed sense of cautious optimism surrounding the sector’s long-term prospects.

This follows news of the government’s ambitious new social housing plan, positive growth during the first half of 2025 and a number of construction segments being touted for strong performance in the months and years to come. 

Government announces £39bn social housing plan

The Labour government has laid out plans to transform social housing over the next decade. 

As part of the new £39bn Social and Affordable Homes Programme, which was announced at the latest Spending Review, the government has pledged to build 300,000 new social and affordable homes over the next ten years, more than double the amount laid out in the previous programme (130,000 homes by 2026).  

Along with the building of new homes, the plans also include an update and modernisation to the Decent Homes Standard. This would mean improvements to the living standards for millions of social housing tenants, as well as Minimum Energy Efficiency Standards being implemented in the social housing sector for the first time.  

Speaking about the Affordable Homes Programme, Deputy Prime Minister Angela Rayner said: “We are seizing this golden opportunity with both hands to transform this country by building the social and affordable homes we need.

“With investment and reform, this government is delivering the biggest boost to social and affordable housing in a generation, unleashing a social rent revolution, and embarking on a decade of renewal for social and affordable housing in this country.”

Workload recovery signals cautious optimism 

According to Arcadis’ Summer 2025 Construction Market View Report, forecasts for construction growth are outpacing the wider economy. Using data from the Construction Products Association, growth forecasts for this year are stronger in comparison to 2024, with new build growth for 2025 at 2.1%, and 4.8% for 2026.

Glenigan’s latest UK construction forecasts paint a similar picture, predicting a 24% jump in project starts by 2027 thanks to a combination of an improving UK economy and rising public sector investment. 

The organisation cites several drivers for surging output, particularly the housing market, which is expected to strengthen considerably during the latter half of 2025 and throughout 2026. Industrial construction is touted as another big factor, with growing demand for logistics space coming from online retailers and third-party carriers.  

This latest spending review has also set out a long-term framework for investment in road and rail networks during 2026, 2027 and beyond, which will contribute to future growth for the industry. Healthcare construction is also showing signs of recovery from 2023 disruptions, thanks to an increase in capital funding for 2025/26.

While, like many other sectors, construction continues to battle the lingering effects of a challenging few years, the reasons to be positive are seemingly becoming more frequent, with long-term construction output forecasts and funding commitments now reflecting this trend.