Construction based sector trends

Group of construction workers in yellow hard hats holding various construction items

(last updated July 2019)

What has been happening in the construction industry

Demand for construction services grew during the late 1990s and the first half of the 2000s as the economy prospered and the housing market boomed. The middle of the 2000s saw very strong demand for all types of building services, as people with plenty of money but not much time spent large amounts on building, extending, renovating and generally improving their houses. The only problem was finding enough skilled people to do the work - an influx of eastern European migrants helped, although some trades-people complained that they undercut established businesses.

Unfortunately, the housing market boom came to an abrupt end in 2008 as the economy weakened. This caused an inevitable downturn in demand for building services. Conditions remained difficult for many throughout the late 2000s and the early 2010s. Although there was still work available for good quality reputable builders, conditions were difficult for many. 2013 saw things start to improve though, and 2014 was a much better year

The economic recovery continued during the first half of 2015 but then slowed in the second half of the year and throughout 2016 and 2017. Growth in the construction industry was subdued during 2016 and 2017. Little change is expected for 2018 - the Construction Products Association forecast that the sector would remain flat, at best, during 2018. New private industrial orders have been falling and growth has been dependent on an increase in infrastructure activity and private housebuilding offsetting a sharp fall in the commercial and industrial sectors. This pattern is expected to continue in 2018.

The loss of jobs in the industry following the financial crisis led to a skills shortage. Around 300,000 skilled craftsmen left the industry, many for good. This led to higher potential earnings for construction industry workers. The skills shortage has continued to cause problems and is expected to worsen as a result of Brexit and the reduction of European migrants to make up the shortage. Carpenters and joiners, bricklayers, scaffolders, plumbers and electricians are in greatest demand, with an inevitable increase in wages for these trades.

Even during the recession and the economic uncertainty following the Brexit vote, the construction industry benefited from:

  • many homeowners extending their homes because of the cost of moving up to a larger property, particularly in areas where prices are high, for example in London
  • the increase in buy-to-let landlords creating a spike in demand for renovations - although recent tax changes have made buy-to-let less attractive so there may be a reduction in this work in future

Materials prices saw some sharp rises during the late 2000s and early 2010s. Fuel prices soared too, making it more and more costly for trades-people to run their business vehicles. Fortunately the mid 2010s saw fuel and other prices ease back. The cost of imported materials (which building firms rely on heavily) increased due to the fall in the value of the pound following the Brexit vote. The cost of materials is expected to continue to increase throughout 2018 and beyond.

Increased wages, the increased cost of materials and inflation generally mean that margins are under pressure. Other constraints on growth are financial constraints, planning and regulations. In such a competitive market it is very important for construction firms to run their businesses professionally and efficiently - and to offer customers excellent service and value for money.


When demand for construction services increases the number of firms offering them also rises. Most areas of the industry are now very competitive. Unfortunately, the industry is also plagued by unscrupulous 'cowboys' who take advantage of unwary home owners by doing shoddy work at over-inflated prices. These cowboys have tarnished the image of the industry and it is very important that legitimate tradesmen uphold high standards to distinguish themselves from their disreputable competitors.

Building materials

Building materials and systems are constantly being refined and improved, with new products coming onto the market all the time. It's important to stay up to date with the latest developments in materials technology to make sure you're always using the best and most cost-effective materials for the job.

Tax for contractors and sub-contractors

In April 2007 a revised 'Construction Industry Scheme' was introduced by HM Revenue & Customs (HMRC) with rules for how contractors and sub-contractors in the construction industry pay tax. This scheme replaced a previous scheme, with key changes including:

  • a verification service replacing cards and certificates
  • monthly returns and pay statements
  • a declaration about the employment status of all sub-contractors used

Trade associations

An excellent way of demonstrating your professional integrity is to join a reputable trade association. Joining an association is also a very good way of keeping up to date with developments in your industry. Try to find out about any associations which represent your particular area of the construction industry.

Subscribing to a trade journal, such as Construction News, is another excellent way of keeping abreast of industry developments.

Visiting trade shows and exhibitions for your industry is a good way of staying up to date with the latest new products, trends and developments. The Exhibitions UK website has information about forthcoming exhibitions for many different industries.

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