Quick answer
Construction output in Great Britain fell 1.0% in the three months to August 2026, the second three-month fall in a row, according to the Office for National Statistics. August was the fourth monthly fall in a row, down 0.2%, and private new housing was the biggest drag, down 3.2% over three months. Industry surveys suggest the decline is easing: the S&P Global UK construction PMI rose to 46.1 in September, though house building remained the weakest area. For developers, a slower market means less competition from other schemes but continued cost pressure and lenders that want a well-tested appraisal.
What the ONS figures show
The ONS published its construction output figures for August 2026 on 15 October. The main points:
- Output fell 1.0% in the three months to August, compared with the three months before.
- New work fell 1.4% and repair and maintenance fell 0.3% over the same period.
- Five of the nine sectors fell, and private new housing made the largest negative contribution, down 3.2%.
- In August alone, output fell 0.2%. New work fell 0.7% and private new housing 1.9%, while repair and maintenance grew 0.4%.
Earlier months were revised down: July is now a fall of 0.5%, rather than the 0.1% rise first reported. The next release is due on 12 November.
Surveys point to a slower decline
The S&P Global UK construction PMI, a monthly survey of firms, rose to 46.1 in September from 44.3 in August. Any reading below 50 means activity is falling, so the sector is still shrinking, but at the slowest pace in eight months. As reported by ITV News, S&P Global's Tim Moore said "house building was again the weakest performer", citing higher borrowing costs and poor market conditions. Around a quarter of firms reported higher purchasing costs, pointing to fuel surcharges, freight charges and raw material prices.
Neil Leitch, managing director of development finance at Hampshire Trust Bank, said of the pipeline of viable schemes and developer confidence that "there simply isn't enough of either", in comments covered by The Intermediary.
What it means for schemes in progress
If you are already on site, the risks to watch are cost, time and the exit.
- Costs. Input prices are still rising for some trades and materials. Check what your build contract allows for, and keep a contingency that lenders and your monitoring surveyor accept. Our guide to the monitoring surveyor's role explains how drawdowns are signed off.
- Time. Delays add interest. Development finance is drawn in stages, so a late stage means a longer loan. See how development finance drawdown works.
- The exit. If units are slow to sell when the build finishes, development exit finance can repay the build lender while you sell. If the build stalls before the end, finish and exit finance may cover the remaining works.
What it means for new schemes
A slower market is not all bad for smaller developers. Fewer competing schemes can mean better land deals and more contractor availability. Official figures also show housing starts in England rose in the second quarter, while planning permissions fell, which we cover in our piece on housing supply and planning reform.
Lenders are still keen to fund good schemes. On 15 October, for example, Pivot announced rate cuts across its bridging and development finance range. What lenders want to see is an appraisal that still works if costs rise and sales slow. Our guide to writing a development appraisal shows how to stress test it, and what development lenders look for covers the rest of the case.
If the senior loan does not cover enough of the cost, stretch senior or mezzanine finance can reduce the equity you need to put in, at a higher overall cost.
Next steps
Before you commit to a new scheme, rerun your numbers with a higher build cost, a longer programme and a lower sales value. If they still work, you have a case lenders will take seriously. We search the market across ground-up development finance lenders and approach those whose criteria suit your scheme. Read how our development finance broker service works, or start with Instant Quotes.
Common questions
Is UK construction output falling?
Yes. The ONS reported a 1.0% fall in the three months to August 2026 and a 0.2% fall in August, the fourth monthly fall in a row. Private new housing was the main drag.
What is the construction PMI?
A monthly survey of construction firms published by S&P Global. A reading below 50 means activity is falling. It was 46.1 in September 2026, up from 44.3 in August.
Can I still get development finance in a slow market?
Yes. Lenders are still funding schemes, but they want a realistic appraisal, a suitable contingency and a clear exit. Experience and the strength of the location matter.
What happens if my units do not sell when the build finishes?
Development exit finance can repay the build loan and give you more time to sell, often at a lower rate than the build facility.
This article reports news and published figures as at 16 October 2026. It is for general information only and is not legal, tax or financial advice. Bridge & Build Finance is a commercial finance brokerage service, not a lender. Finance is subject to status, lender criteria, valuation, underwriting and approval.
