Quarterly State of the Market Report

Directors outlook

Focus on the positive and keep doing what our clients truly value – This has been my consistent message to my team for the past few years and it has never been more true than in the current market.

Its tough yes but its tough for everyone, the residential market has taken a hammering with the Gateway 2 and BSR slowing things down but we are seeing things start to happen.  The Government have taken action to help the BSR move faster, there were always were going to be teething problems and delays and schemes are going to start coming through over the coming months.

For everyone involved in the construction industry its about adapting to the current needs and supporting your clients through the regulatory and specification requirements and doing what you can to help reduce delays.

I am extremely positive about the future, the industry is in a huge state of change for the better and I relish the challenge!”

– Hans Purdom, Managing Director at Selo.

Consumer confidence

We sent out a survey to our customers to learn how businesses feel about trading conditions in 2025 so far and confidence for the remainder of the year . We had responses from architects, sub-contractors, main contractors and passive fire protection.

How do our customers feel about trading conditions for 2025 so far?

The majority of our customers scored the first half of the year as average, which is expected given the uncertainty generated by the macro factors globally and the number of projects stuck in Gateway2. However, more scored ‘good’ than ‘poor’ which indicates customers are on the positive side of average, but no customers scored ‘excellent’.

• Excellent – 0
• Good – 37.5%
• Average – 56.3%
• Poor – 6.3%

How do our customers predict trading conditions for the rest of the year?

Customers are feeling more positive for the remainder of year than the start. Nearly double the number of customers scored ‘good’ for H2 compared to H1 and few scored ‘average’. No customers scored ‘excellent’ but until the positive news around Gateway 2 support is realised, alongside a change in other macro factors, then ‘excellent’ scores are unlikely.

However, it is pleasing to see the majority of our customers are feeling positive towards the remainder of 2025.

• Excellent – 0
• Good – 60%
• Average – 33.3%
• Poor – 6.7%

Industry news

Gateway 2

Gateway 2 has been problematic for a number of our customers who have seen their high-rise residential projects rejected with no explanation or stuck. The approval percentage for projects in Gateway 2 decreased from 14% to 10% however there is some good news.

The government has stepped in to take direct control of the Building Safety Regulator with a new fast track process that has been introduced to speed up decisions on new build schemes and remediation jobs.

As a result, we should see projects move through Gateway 2 faster, whilst still providing the thorough checks required to ensure buildings are safe and compliant.

Grenfell documentary

The Grenfell documentary bought some much-needed attention to a tragic event which occurred due to avoidable mistakes and a lack of care for safety. The documentary, which is available on Netflix, shows a mix of poor workmanship, poor combinations of products, and assumptions over testing as a system. The documentary brings to light that we all need to be on the path to doing the right thing and the consequences of cutting corners or prioritising profit over safety.

Construction Products Green Paper

A new green paper was published in February 2025 which is highlight likely to become new legislation within this parliament (2025).

Despite the significant reforms in response to the Grenfell Tower tragedy, the government is clear that critical gaps persist in the construction industry. This government is proposing a series of reforms aimed at enhancing safety and ensuring accountability and have written the Construction products Green Paper.

The green paper lays the foundations for a framework to enhance safety for construction in the UK.

Whilst currently a green paper, many believe this will become legislation by 2029.

Summary:

• Currently two thirds of construction products are not regulated
• The green paper wants to eliminate unsafe materials from the market
• Build trust in UK construction products to support government growth target
• Set out how testing and certification will be strengthened
• Regulators given the power to enforce
• This is not just for fire, but general safety
• Environmental consideration is important – EPDs are not required yet
• Every construction product must have a standard risk assessment
• Every construction product must be regulated

At Selo, we have been supportive of increased changes to enhance safety, including for non-fire rated products. We will be embracing the upcoming changes.

Read the green paper

Macro measures

GDP

The general trend for GDP has been on the rise over the last two years, despite dips in Q3 2023 and Q3 2024. The first quarter of 2025 saw linear increases month-on-month before a slight dip in April. Every month this year has had a higher GDP than the previous years which indicates positive change for the UK economy which should in turn lead to improve trading conditions.

Customer confidence

Glenigan’s confidence index has reported a huge increase in confidence in 2025 and is the highest it has been in the last two years. This correlates with the increase in confidence we have seen from our own customer survey. Confidence is a major factor in market conditions, so we should see improvements to trading conditions in H2 2025.

Planning applications

The number of planning applications received as greatly increased in Q1 2025 and the number of approvals has increased in Q1 2025. The increase in applications alongside the Governments plans to fast track projects going through the Building Safety Regulator indicates a strong end to 2025 for all projects but particularly for high-rise residential.

Inflation

Inflation has been at unprecedented levels over the last four years, which will have affected the cost of everything from materials to staff. Inflation has generally decreased over the last two years, with a slight increase from September 2024. However, despite the increase, inflation is about half of the rate it was during Q1 2023. Reduced inflation should help businesses operate more profitably, encourage a growth market and increase trading confidence.

Conclusion

The last few years have been turbulent but through analysing macro factors and consumer confidence, there is good reason to be positive for the remainder of 2025. We are seeing positive trends for GDP, inflation, construction confidence index, as well as our own customer feedback.

In addition, the government stepping into take direct control of the Building Safety Regulator to provide a Fast Track process aimed at unblocking high-rise housing is extremely positive news. The government will be keen to speed up approvals to meet their housing targets but will also be conscious of ensuring safety and without the commercial pressures of private companies that lead to profit-orientated decision making.

We will review the state of the market through macro factors and survey our customers to understand their confidence levels again at the end of Q3.  We will share the full report with our Fire Door Club subscribers.

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