There was a 19% drop in the value of construction project starts in the three months to the end of January 2025, says new data from Glenigan.

The news comes as it published the February 2025 edition of its Construction Review.

The review focuses on the three months to the end of January 2025, covering all major (>£100m) and underlying (<£100m) projects, with all underlying figures seasonally adjusted.

It says the construction sector saw a sharp decline in major project-starts in the three months to January, with few schemes over £100m breaking ground.

This contributed to a 19% drop in total project-start value, despite underlying growth in smaller developments, particularly in private housing.

Adding to the challenge, the development pipeline has also weakened, with fewer main contract awards and planning approvals.

This points to the likelihood of further declines in both large-scale and smaller project starts in the months ahead.

However, recent interest rate cuts and the prospect of a gradual economic recovery may help to restore investor confidence as the year progresses, said Glenigan.

There were 12% fewer housing starts compared with the same period a year earlier, according to latest data.

However, project-starts on housing projects jumped 19% from November 2024 to the end of January this year, highlighting quarter-on-quarter recovery.

Private housing accounted for the lion’s share (69%) of overall project-starts, growing 39% year-on-year to a total value of £8.05bn. In contrast, private apartment construction struggled, falling 48%, while student accommodation saw modest growth of 3%, buoyed by a handful of large schemes.

Underlying projects (<£100m) also performed particularly well, up on both the preceding year and the previous quarter.

It provides a more optimistic outlook for the housing market than the latest S&P Global PMI data, which suggested that total housebuilding work fell for the fourth successive month in January.

The South-east remained the busiest region for residential construction, although activity fell 37% year-on-year to £1.6bn.

Meanwhile, the East of England and Scotland bucked the trend, experiencing impressive growth of 73% and 86%, respectively.

London led in planning approvals, accounting for 27% of the sector (£4.14bn), though approvals were down 27% on the previous year.

With UK house prices rising in January and an increase in new sellers entering the market, the Glenigan Forecast suggests private housing construction could grow by 13% in 2025, with social housing also set to increase by 11%.

However, these gains must be sustained by a strong pipeline of new projects - something that recent government pledges to boost housebuilding will be key to delivering. While planning approvals and contract awards remain subdued, further policy interventions could help unlock development and drive much-needed growth in the sector.

Allan Wilen, Glenigan’s economic director, said: “While housing projects are still lagging compared to last year, the government's focus on housebuilding and increasing consumer confidence should help form a growing development pipeline.

“The key will be translating this potential into actual construction starts.”