UK construction output fell again in May, with housebuilding the weakest part of the sector as the S&P Global Construction PMI dropped to 38.2 and residential activity sank to 36.
The figures mark the fastest overall downturn in construction activity since May 2020 and extend the sector’s contraction to 17 straight months. Residential work was the worst-performing segment, with builders citing weak market conditions and the drag from elevated borrowing costs.
For landlords and investors, that matters because a thin development pipeline does not stay confined to housebuilders. Fewer schemes starting, slower delivery and cautious funding decisions all feed back into rental supply, stock quality and the pricing power of existing landlords.
Residential building remains the weakest link
S&P’s May survey found new orders across construction fell at the sharpest pace for six years, while input cost inflation picked up to its fastest rate since June 2022. Supplier delays also worsened for a third month, adding another obstacle for projects already under pressure.
Tim Moore, economics director at S&P Global Market Intelligence, said economic uncertainty and rising inflation after the Middle East conflict had triggered the steepest drop in new work since the start of the pandemic, with elevated borrowing costs also weighing on demand.
Richard Pike, sales and marketing director at Phoebus Software, warned that government housebuilding ambitions risk becoming another broken promise unless the structural barriers holding back development are tackled far more urgently.
This follows Residential Landlord’s analysis of planning applications hitting a 14-year low, which pointed to a weaker future pipeline well before these latest survey numbers arrived. Combined with recent evidence of softer new-home registrations, the picture for future rental supply is becoming more difficult to dismiss.
What the slowdown means for landlords
There is a temptation to read weak construction data as mainly a housebuilder problem. For landlords, it is wider than that. A prolonged slowdown can support rents by keeping supply constrained, but it also reduces choice for investors trying to improve stock, buy new units or recycle capital into better-performing areas.
It may also keep pressure on policymakers. If ministers want more rental homes while private building activity stays weak, landlords are likely to face a familiar pattern: stronger demand from tenants, limited fresh stock, and more political pressure whenever rents respond to that imbalance.
There is another warning in the numbers too. Builders are not just dealing with weak confidence. They are facing delayed projects, slower decisions and higher cost pressure through energy, transport and materials. That makes any quick supply rebound less likely, even if borrowing conditions ease later this year.
The full S&P release is available here and shows how far the sector remains from stabilising. For landlords watching the balance between rental demand and available homes, this is another sign that supply-side relief is not arriving quickly.
Opinion
Landlords do not benefit from a housing system that cannot build enough homes, even if scarcity props up rents in the short term. If planning friction, cost inflation and weak confidence keep choking new supply, the market will stay politically tense and operationally hard to navigate.
