Construction sector to shrink by 2.8%

Searchland analysis has found that the UK construction sector is set to reduce by -2.8% in 2023, driven by a declining residential sector as developers continue to struggle with the challenges presented in the current market.

It showed that prior to the pandemic, the market size of both the residential and commercial construction sectors had been increasing consistently every year since 2013. In 2019, this combined market size based on revenue sat at £114.2bn, the highest seen over the last decade.

Co-founder and CEO of Searchland, Mitchell Fasanya, said: “Both the commercial and residential construction markets have faced some challenging times of late and the pandemic certainly left its mark with respect to the revenues generated across both sectors. “

The complications of the pandemic had a notable impact, with total market size falling by -4.2% in 2020 and further -20.6% in 2021.

The result of this decline over two consecutive years meant that the total estimated size of the construction market sat at just £86.8bn – the lowest annual benchmark seen since 2015.

with interest rates spiralling and the dark clouds of economic uncertainty gathering over the UK, 2023 is expected to bring a reversal to this sector revival.

The total size of the combined construction sector is estimated to contract by -2.8% come the end of the year, putting total market size based on revenue at £104.6bn

This decline is expected to be driven by the residential sector, with cooling market conditions caused by higher mortgage rates expected to dampen demand for residential homes and reduce the size of the residential construction sector by -4.7%.