Residential construction starts fell 36% year on year in the three months to the end of August, Glenigan’s September Index has found, as higher build costs and weak house sales forced developers to revisit site viability.
The latest reading also shows a 15% decline from the preceding three months. Private housing starts fell 8% over that period and 37% from a year earlier, while social housing starts dropped 29% quarter on quarter and 30% annually.
A thinner pipeline of homes reaching completion would leave the private rented sector carrying more demand in areas already short of stock. For investors, the warning is not simply about rent pressure: a slowdown rooted in viability can also restrict acquisition opportunities and keep development costs high.
The immediate impact is likely to be uneven. Areas with established demand and limited available land may feel the shortage first, while markets with weaker sales could see developers hold back even when local rental demand remains firm. That makes the quality and location of existing stock more important, not less.
Private and social housing starts weaken
Glenigan tracks construction starts below £100m. Across all sectors, the value of underlying work starting on site slipped 2% on the previous three months and was 20% below the equivalent period in 2025. Non-residential starts offered some support, rising 6% quarter on quarter, but housing remained the weakest part of the market.
Allan Wilen, economics director at Glenigan, said: “After a rough start to the year, it’s fair to say the sector caught its breath over the summer and, whilst activity levels remain painfully low, they have stabilised.”
He said residential activity was still being held back as developers weighed site viability against higher construction costs and the forthcoming building safety levy. That distinction is important. A weak pipeline caused by delayed or marginal schemes is harder to repair quickly than a seasonal dip in output.
This follows Residential Landlord’s June report on Glenigan’s 2026 private housebuilding forecast, which expected private output to fall before a possible recovery in 2027. August’s starts data suggests that recovery will depend on schemes becoming viable rather than merely receiving planning consent.
Housing supply risks extend beyond planning
The regional picture adds to the concern. The South East recorded a 29% quarterly fall in overall project starts and a 43% annual drop, while the West Midlands was down 18% over three months and 41% year on year. Those results sit uneasily with the government’s delivery ambitions and with the need for more homes in rental markets under affordability pressure.
Residential Landlord has previously reported how stalled sites could affect the route into ownership for renters. Glenigan’s figures provide a more immediate test: even where land and permissions exist, finance, sales confidence and construction costs can still prevent a project starting.
Landlords considering purchases should not treat a weaker construction pipeline as an automatic gain. Tighter supply may support demand, but it can bring stronger political pressure over rents and make good stock more expensive to buy. The full September Glenigan Index points to a market where the obstacles to new supply are commercial as well as regulatory.
Opinion
Housing targets are judged on completions, but starts are the earlier warning signal. The government cannot rely on planning reform alone if costs and sales risk keep approved schemes off site. A rental market short of homes may sustain demand, yet that is not a healthy foundation for landlords or tenants.
