Data from insight and research company Glenigan has revealed that UK construction starts have fallen 20% year on year as the ongoing conflict in Iran “strangles” development.
Its latest Construction Review revealed that construction starts in the three months to the end of March 2026 fell 6% on the previous three months, nosediving 20% on the 2025 levels.
Detailed planning approvals also saw a 29% reduction in value over the review period, plummeting by 51% on the previous year’s performance.
While starts fell, Glenigan revealed main contract awards rose against the preceding quarter by 30% and by 3% year on year.
Glenigan said the results were prompted by the escalation of the Iran war, leading to the closure of key trading routes and damaged investor confidence. It said the review paints a bleak picture of an industry buffeted by frustratingly persistent socioeconomic headwinds.
Glenigan added that the war is “likely to exacerbate the current downward spiral over the coming months”, with the situation unlikely to end in the near term. The ongoing conflict in Iran has hit large swathes of the economy since beginning at the end of February, with housebuilders this week reporting struggles.
Last month, Glenigan revealed that construction starts plummeted by 39% in the three months to the end of February 2026.
Allan Wilen, economics director at Glenigan, said private investment and consumer spending stalled during the period, with the war “exacerbating pressures by stoking inflation and further weakening economic growth”.
“Unfortunately, this situation is unlikely to end in the near term, with energy costs expected to remain high this year and the prospect of interest rates cuts fading fast,” he added.
“This growing culture of cautiousness is extending to contractors, subcontractors and product manufacturers alike, where higher oil prices are starting to cascade down the supply chain, raising energy, material, transport and onsite costs. Already battling against uncomfortable financial conditions, skills shortages and a deluge of complex regulations, it’s little wonder that many are keeping their powder dry until economic stability returns.”
However, Glenigan said the office, hotel and leisure and education sectors stood out during Q1, demonstrating strong growth year on year in project starts, rising 75% for offices and 31% for both hotel and leisure and education.
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