When I first saw the Q3 2025 construction figures—9.8% quarterly growth in new orders—I expected to find an industry in expansion mode. Over £1 billion in additional orders suggests momentum.
Then I looked at where that money was going.
Private industrial construction surged 114.1% quarter-on-quarter. Private commercial orders jumped 51.4%. Public housing gained 10.4%. So far, promising.
But private housing fell 5.1%. Infrastructure dropped 12.5%. Public non-housing work collapsed by 40.5%.
This isn’t growth. It’s reallocation. Money is flooding into specific sectors while others starve.
The Volatility Problem
Before getting carried away with these numbers, I checked with Dr. David Crosthwaite, BCIS Chief Economist. He cautions against reading too much into them. New orders data is “notoriously volatile” and doesn’t correlate well with future output.
That 9.1% year-on-year housing increase? It’s measured against Q3 2024, which hit the lowest level since pandemic lockdowns. We’re comparing against a crater.
His assessment cuts deeper: “Heading into the last few months of the year, the ‘get Britain building’ rhetoric hasn’t yet turned into delivery. Demand is broadly flat and inflation is sticky, leaving a stagflation-type squeeze.”
That’s not volatility. That’s stagnation dressed up in quarterly fluctuations.
What The Industrial Surge Reveals
The 114.1% quarterly jump in industrial construction isn’t random. I traced the 21.3% year-on-year increase through August 2025 and found companies pouring capital into domestic manufacturing and warehouse capacity.
This is a direct response to supply chain failures exposed by Brexit and the pandemic. Businesses learned that just-in-time inventory models break when borders close or shipping costs triple. Now they’re building redundancy into their operations through physical infrastructure.
Logistics hubs, manufacturing facilities, and distribution centers are getting funded while housing projects get shelved. Private investors control 74.8% of total construction spending, and they’re responding to supply chain risk, not government housing targets.
The market is speaking clearly: resilience pays better than homes.
The Housing Disconnect
Meanwhile, private housing orders declined despite government rhetoric about “getting Britain building.” I wanted to understand why the market wasn’t responding to policy signals.
The math is brutal. First-time buyers need average deposits of £57,000 to £61,000. House prices sit at a 5.0 price-to-earnings ratio, well above the long-term average of 3.9.
On the developer side, sticky inflation plus rising labor costs squeeze margins. When buyers can’t afford homes and builders can’t make money building them, new orders fall regardless of government encouragement.
The planning system tells the same story. England needs around 300,000 new homes built annually to meet demand. Planning permissions fell to around 242,600 in 2024, the lowest since 2014.
Policy isn’t matching the scale of the problem.
What I Found
The Q3 2025 figures don’t show construction industry growth. They show capital flowing away from public infrastructure and housing toward private industrial projects that solve immediate business problems.
Private investors are building the warehouses and factories they need to control their supply chains. They’re not building the homes England needs because the economics don’t work.
Public sector construction outside housing is contracting because budgets are tight. Housing remains constrained because affordability is broken and policy hasn’t fixed the planning bottleneck.
That 9.8% quarterly increase? It masks an industry dividing into winners and losers based on whether projects serve private capital’s immediate interests.
Industrial construction will continue growing as companies build domestic capacity. Housing will stay stuck until someone addresses affordability, financing, and planning constraints simultaneously—not just one at a time.
The headline numbers look impressive. The reality underneath is fragmented, stagnant, and increasingly unequal.