The biggest investor takeaway is what is happening to new housing supply.

S&P Global’s December release shows the headline PMI at 40.1 (anything below 50 means contraction) and highlights that housebuilding is the weak spot, with the housing activity index falling to levels last seen in the first Covid lockdown period. Reuters also reported that residential building fell to its lowest level since May 2020. (https://www.reuters.com/world/uk/uk-builders-suffer-longest-downturn-since-global-financial-crisis-2026-01-07/).

This is good news for landlords because it means fewer new homes will be completed in the years ahead. Housing does not switch back on quickly. When projects get delayed for months, it creates a gap that takes years to refill.

So while builders deal with falling workloads, investors benefit from a market where tenants have fewer options.

The government target is 1.5 million homes, but the market is not delivering

The government has set a clear ambition: 1.5 million new homes over this parliament, and a longer-term push to get to over 300,000 homes per year. This appears directly in official government housing strategy documents. (https://www.gov.uk/government/publications/homes-england-strategic-plan-2025-to-2030/homes-england-strategic-plan-2025-to-2030-html).

But here is the key point for investors: targets do not build homes. Output does.

Full Fact’s tracker (updated in late November 2025) described the pledge as appearing “off track”, based on net additional dwellings data and the scale of delivery required. (https://fullfact.org/government-tracker/1-5-million-homes/).

When the government is aiming high but the construction data is moving lower, the gap between housing demand and housing supply can widen even faster. That is the kind of backdrop that typically supports:

• higher rents in areas with strong tenant demand
• lower void periods for well-located properties
• stronger long-term value in existing stock

November was the low point, and it shows why supply is not bouncing back quickly

Your second article focuses on the sharp fall in November, linked to uncertainty ahead of the Budget. That is backed up by S&P Global’s November PMI release, which shows the PMI fell to 39.4, down from 44.1 in October, the lowest since May 2020.

Sky News covered the same point, reporting that activity shrank at the fastest pace since Covid, with firms blaming fragile client confidence and delayed investment decisions before the Budget. (https://news.sky.com/story/construction-activity-shrank-at-fastest-pace-since-covid-ahead-of-budget-13479235).

For investors, what matters is the result, not the politics:

• delays reduce the future supply pipeline
• the pipeline reduction supports rental competition
• rental competition supports landlord performance

Even if confidence improves, new supply still takes years

December’s PMI improved slightly from November, but it is still deep in contraction territory. And while some firms reported improving optimism (often linked to hopes for lower borrowing costs), that does not instantly turn into completed homes.

Construction is slow by nature. Even if sentiment improves tomorrow, planning, funding, labour, and build times mean completions lag far behind.

That lag is why a construction slowdown today can support landlords for several years.

House prices and demand signals are still supportive

Nationwide’s official December and Q4 2025 release shows prices dipped month-on-month, but the broader message is that demand remains active, and most regions are still seeing modest annual growth. (https://www.nationwide.co.uk/media/hpi/download/dec-q4-2025).

From a passive investor standpoint, this is another reason the outlook stays positive:

• demand for housing remains, even when supply is restricted
• first-time buyer activity can strengthen overall market confidence
• affordability pressures keep many households renting for longer

“For passive investors, this is straightforward. The UK is not building enough homes, and the latest construction data shows that supply is tightening further. When demand continues to outweigh supply, it supports rents and strengthens the long-term investment case.”

– Joshua Walters, Senior Property Consultant, Find UK Property

The bottom line for Find UK Property clients

Construction is slowing. Housebuilding is in a slump. The government is targeting 1.5 million new homes, but delivery is not keeping pace.

For passive investors, that is good news because it reinforces the basic UK housing story: Not enough homes, too many people who need them.

That supply shortage is what supports rental demand, keeps occupancy strong, and underpins long-term value in the right locations.