Mace Consult has released its Q2 2025 Market View report, highlighting signs that the UK construction industry is beginning to respond to government investment. New orders and infrastructure funding are starting to generate some momentum but the pace of recovery remains uncertain amid ongoing delivery challenges, the firm says.
For the first time, Mace Consult has separated tender price forecasts for real estate and infrastructure to reflect diverging market conditions. The national forecast for real estate is 3.5%, while infrastructure is expected to rise by 4.0% in 2025. London鈥檚 all-in forecast remains at 3.5%. These figures reflect growing momentum in infrastructure but also continued pressure from labour costs.
The report describes a market in transition. While overall construction output was flat in the first quarter of 2025 (Q1), there were signs of activity: all new work grew for a third consecutive quarter, and new orders rose by 26.6% compared to Q4 2024, the strongest quarterly increase in more than a year. Public non-housing and private industrial sectors led the way, with output growth of 11.9% and 8.7% respectively.
However, since the Mace report was prepared, the Office for National Statistics has published its estimates for the second quarter of 2025, showing output up by 1.2% but new orders down by 8.3%, compared to Q1.
Mace cautions identifies capacity constraints and planning as obstacles to progress should new orders ramp up.
Oliver North, director of cost and commercial management for Mace Consult in the UK and Europe, said: 鈥淭he UK construction market is showing signs of resilience in 2025, with new orders rebounding and infrastructure investment gaining momentum following the spending review.
鈥淥ur updated tender price forecasts reflect growing momentum in infrastructure, supported by government funding and the NISTA pipeline, which will provide greater visibility and confidence across the sector.
鈥淲hile stabilising material prices offer some relief, rising labour costs and ongoing skills shortages continue to challenge delivery. The sector is also navigating geopolitical uncertainty, from tariffs to global commodity shifts, which risks impacting future inflation.
鈥淭he industry must remain agile, as capacity constraints and planning delays could limit progress. As we look ahead, collaboration across the supply chain and a focus on productivity will be essential to sustaining growth.鈥�
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