Welcome to the Q3 2025 edition of Construction Market Intelligence, RLB’s insightful, up-to-date guide to construction activity around the UK incorporating our quarterly tender price forecast.

The RLB Weighted Average Tender Price Index forecast uplift for 2025, as at Q3 2025, is:

3.03%

Previous quarter’s forecast for 2025: 3.22%

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Market’s recovery could be ‘double-edged sword’ due to labour shortage

With the second half of 2025 now well underway, the latest data collated for this edition of Construction Market Intelligence depicts a very mixed picture of the UK construction industry.

According to the Office for National Statistics (ONS), construction work volume is up just over 1% for the past year to June, and up by almost 1.7% for the most recent half year. Although these movements may be marginal, they are at least positive. However, repair and maintenance work output remains high, set against a seeming recovery of housing, which is up 1.3%.

While these volume changes show an overall limited movement, the local effects are very variable, as highlighted in RLB’s Market Activity Cycle data and tender price forecasts for each region of the UK (see Regional Insights).

The work volumes of different sectors are also extremely varied in regional markets, depending on proportions of public and private sector work, as well as local economic market development. Likewise, new orders in the construction industry appear to show only limited growth other than to infrastructure work, which has burgeoned over the last six months.

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Taken as a whole, the picture is one of investor uncertainty and nervousness in the private sector, contrasted by anticipation in the public sector of upcoming new investment.

Allied to concerns arising from the demand side, additional cost imposts for contractors and subcontractors have arisen this year in the form of increases to National Insurance, National Minimum Wage and National Living Wage. BCIS estimates that labour costs will rise some 16% over the five years to 2030.

From a resource perspective, of course, there are still the pressures of skills shortages, which could become very much more of an issue were there to be any sudden influx of labour-intensive workload. So, the coming to market of more public sector work could be a double-edged sword, and could bring with it an unexpected cost breakout, which would necessarily lead to tender price inflation.

However, in markets where ‘more of the same’ seems the order of the day, change can occur rapidly if doubt is assuaged. Should that be the case, and in the current case that means easing of trade tensions and other geopolitical issues, investor confidence could return quite rapidly as funds seek investment options. Given the ongoing resource concerns that the UK construction market faces, that would give rise to a whole new set of challenges.

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