Dalbergia Group’s Q3 2025 UK Construction Market Update provides expert insights into government investment, inflation, and market forecasts shaping the sector.
UK Construction Market Update Q3 2025 | Dalbergia Group
News
6 mins
24 Jul 2025
Key Insights from the UK Construction Market Update
- £725 billion government investment strategy across housing, energy, and infrastructure
- Government intervention in the Building Safety Regulator to reduce delays
- Inflation at 3.6% and interest rates steady at 4.25%
- Dalbergia’s Tender Price Index (TPI) forecast at 3.0% for 2025
Government Investment Strategy
The UK Government’s 10-year, £725 billion investment plan includes:
- £39bn for affordable housing
- £120–150bn for clean energy
- £70bn for healthcare infrastructure
- £38bn for education and skills training
While this is a positive signal for the construction sector, execution timelines remain unclear, raising concerns among investors.
Housing Delivery in the UK Construction Market
The government aims to build 1.5 million homes over five years, but only 186,000 were delivered in the first year. At the current pace, the UK will fall short by 570,000 homes.
Building Safety Regulator
Only 9% of projects have passed Gateway 2 under the Building Safety Regulator. The government has now taken control, increasing staff by 100 to address the backlog and reduce the average 36-week approval time.
Inflation & Interest Rates Impacting the UK Construction Market
- Inflation rose to 3.6% in June 2025, driven by global conflicts
- Interest rates remain at 4.25%
- Unemployment has increased to 4.7%, while wage growth has slowed to 5.0%
These factors are affecting project viability and access to affordable finance.
Dalbergia Tender Price Index Forecast
Dalbergia forecasts a 3.0% TPI for 2025, with a gradual decline through 2028, indicating market stabilisation.
| Year | TPI Forecast |
|---|---|
| 2025 | 3.0% |
| 2026 | 3.5% |
| 2027 | 3.4% |
| 2028 | 3.3% |
Dalbergia Nationwide
With offices in London, Manchester, Birmingham, Leeds, Bristol, Swansea, and Peterborough, Dalbergia provides:
- Due diligence
- Cost and project management
- Monitoring and recovery services
We’ve advised on over £10bn in assets and manage 250+ live projects for 70+ clients.
