Britain’s private housebuilders face a 10 per cent fall in output this year, with the country’s largest construction sector sliding faster than forecasters expected only months ago. That is according to the Construction Products Association’s new Summer Forecast, published on Monday, which cuts the 2026 outlook from the 7 per cent fall forecast in spring and holds 2027 flat from the lower base.
Homebuyer demand has weakened sharply in recent months as mortgage rates climb in the wake of the Middle East conflict, the association reports, compounding an affordability squeeze that predates the fighting.
“This will exacerbate the issue of affordability,” the association said, warning of a construction product price spike in the second half of the year, stacking onto regulatory costs, with the Building Safety Levy taking effect in October and the Future Homes and Buildings Standard following in March 2027.
Timber feels the fall first, with structural frames, I-joists, and engineered products tracking private starts more tightly than any other material class, and timber frame gaining share as builders favour speed and energy performance. The UK imports 81 per cent of the timber it uses, leaving suppliers from Scandinavia to the Baltic carrying the demand shock.
One cost line runs the other way, with the 50 per cent tariff on imported steel, in force since 1 July, raising the price of the frame material, timber competes against.
Total construction output had already fallen 1.6 per cent in the year to date before the conflict’s effects registered, according to the Office for National Statistics. The CPA now expects a 3.3 per cent fall across 2026, with commercial output down 4.9 per cent and 2027 growth of 1.2 per cent carrying risks it calls heavily weighted to the downside.
Repair, maintenance, and improvement, the second-largest sector, is forecast to fall 8 per cent, with homeowners saving rather than spending on discretionary projects, while infrastructure keeps growing 3.2 per cent on long contracts and funded pipelines.
“The new government will have to focus on enabling house building and construction demand,” Rebecca Larkin, the CPA’s Head of Construction Research, said, warning that essential capacity and skills lost over the last two years will only worsen as activity falls over the next 12 to 18 months.
