Rising Household Debt and Tighter Credit: A Hidden Risk for Construction UK Demand

UK households are increasingly relying on borrowing to manage day-to-day finances. December’s Consumer Sentiment Index shows that the need for unsecured credit reached a 16-month high, while access to credit remains constrained.

This combination has important implications for construction demand heading into 2026. Business leaders and decision makers in the construction industry must consider the impact of household debt and funding constraints when planning future projects, as these factors directly affect project scope, timelines, and overall business value.

Borrowing rises as conditions tighten

S&P Global reports that households have increased borrowing for an eleventh consecutive month, even as credit availability remains below the neutral threshold. Debt levels rose for the second month in a row, at the fastest pace in five months.

This indicates that households are borrowing out of necessity rather than confidence.

Implications for housing and development

For the construction sector, rising household indebtedness often results in:

• Reduced mortgage affordability

• Delayed home-buying decisions

• Increased sensitivity to pricing and incentives

Private residential developments are particularly exposed, especially where projects rely on strong off-plan sales or rapid sales velocity. In these developments, it is essential to carefully manage project activities and resources throughout each phase of the project lifecycle. This ensures that all deliverables are completed on schedule and that the end product meets client expectations and project requirements.

Construction project risks

Construction project risks encompass a wide range of potential events and circumstances that can threaten a project’s ability to meet its objectives—whether those are related to time, cost, quality, or safety. In today’s complex construction industry, effective project management is essential for identifying, analyzing, and mitigating these risks to ensure project success.

A skilled project manager brings both technical knowledge and practical experience to the table, enabling them to conduct thorough risk analyses and develop robust strategies for risk mitigation. Project professionals must be adept at recognizing risks that can arise from various sources, such as design and planning errors, unforeseen site conditions, adverse weather, labor shortages, and fluctuations in material availability. By systematically analyzing these factors, project teams can determine the likelihood and potential impact of each risk, allowing for informed decision-making throughout the project lifecycle.

One key aspect of risk management in construction is the use of chemical analysis to assess the quality and suitability of construction materials. Regular chemical analyses help ensure that materials meet required standards for strength and durability, reducing the risk of failures that could lead to costly delays, repairs, or safety incidents. This technical process is a critical component of quality assurance and supports the delivery of successful projects.

However, managing risks in construction is not solely a technical challenge. It also requires strong communication and relationship management skills. Project managers must coordinate activities among diverse stakeholders—including engineers, contractors, clients, and suppliers—while negotiating contracts, resolving conflicts, and ensuring that everyone is aligned with the project requirements and objectives. Ongoing collaboration and transparent communication are vital for proactively identifying and addressing risks as they arise.

To navigate the complexities of modern construction projects, organizations should adopt structured management processes and leverage proven tools and techniques. Approaches such as incremental planning, component-based scheduling, and detailed risk analysis enable project teams to break down large, complex projects into manageable tasks. This incremental approach allows for continuous monitoring of progress, early identification of potential issues, and timely implementation of mitigation strategies.

Ultimately, the ability to deliver successful projects in the construction industry depends on a combination of technical expertise, analytical skills, and effective stakeholder management. Project managers and their teams must commit to an ongoing process of learning and development, staying up-to-date with the latest technologies, methods, and best practices. By fostering a culture of continuous improvement and proactive risk management, construction professionals can consistently deliver high-quality outcomes that meet client needs, control costs, and maximize project benefits.

Why planners and project managers should take note

Macroeconomic indicators like household debt trends often impact projects before changes appear in official housing starts or completions data.

Robust project controls should therefore include:

• Demand-side risk assessments

• Flexible phasing strategies

• Scenario-based programme planning

Using a structured project management framework helps maintain focus on key objectives and ensures effective communications among all stakeholders throughout the project lifecycle.

At B Project Ltd, we help clients align programme assumptions with real-world economic signals, reducing the risk of misaligned schedules and cost overruns. The construction sector is continually developing new approaches to scenario planning and risk management in response to changing economic signals.

Source:S&P Global Market Intelligence (2025), UK Consumer Sentiment Index – December 2025