Wales’ construction industry is showing signs of recovery in H1 2025, with workloads, enquiries and employment increasing. But rising costs and persistent skills shortages mean homeowners may still face higher prices, longer delays, and in some cases cancelled projects, according to the latest State of Trade Survey from the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB).
Overall workloads in Wales increased in the first half of 2025, with house building and repair, maintenance and improvement leading growth. 53% of builders reported higher workloads compared to the end of 2024, and 56% reported an increase in enquiries. Demand is particularly strong for home improvement and major works, while house building starts remain steady across smaller firms.
However, ongoing challenges in recruitment and spiralling costs are putting pressure on SMEs, who make up the backbone of Wales’ construction sector.
Skills shortages bite hard
- 76% of firms said the lack of skilled tradespeople affected their work, leading to job delays (44%) and cancellations (38%).
- The hardest trades to recruit were roofers (47%), general labourers (47%) and bricklayers (47%), followed by plumbers/HVAC trades (35%), carpenters/joiners (32%) and plasterers (32%).
- Specialist skills are also in short supply: 82% of firms struggled to hire workers with knowledge of the new building safety regime, 74% with sustainable building practices, and 74% with new technologies.
Rising costs squeeze small builders
- 87% of firms reported rising material costs, the highest across the UK home nations.
- Wages increased for 72%, while 59% raised the prices they charge to keep pace with costs.
- The impacts of cost pressures are stark: 55% reported reduced profits or losses, 41% restricted recruitment, and 31% said their business viability was at risk.
- Looking ahead to Q3, most firms expect prices, wages and material costs to keep rising, with net increases of +65% to +71%.
Delays and late payments compound the pressure
- Half of firms (50%) said projects were delayed due to changing project parameters, while 44% cited planning delays.
- Market uncertainty (29%) and material shortages (26%) were also common causes.
- Payments remain a challenge: only 38% of Welsh builders said invoices are paid within agreed terms, while 18% reported invoices are often paid late.
Outlook more positive than negative
Despite these pressures, Welsh builders remain cautiously optimistic: 65% have a positive outlook for the next two quarters, compared with 6% who are negative and 6% uncertain.
Ifan Glyn, Cymru Director at the FMB commented: “It’s encouraging to see that builder workloads and enquiries are on the rise here in Wales. Hopefully early signs of a much-needed broader economic recovery. However, I remain deeply concerned about the ongoing skills crisis. Conversations I’m having daily with members confirm that the lack of access to skilled labour is actively holding them back from taking on more work. Our current skills and training system is not fit for purpose and is in urgent need of radical reform. Without decisive action, the impact will extend far beyond the construction sector.”
Glyn continued: “More than 94,000 households in Wales are on social housing waiting lists, and 115,000 are living in severe fuel poverty. A shrinking construction workforce threatens our ability to build new homes, improve the existing stock, and make meaningful progress in addressing these urgent issues. With the Senedd elections fast approaching, we will be engaging closely with all the political parties to push for real commitment to resolve this critical challenge.”
David Kirby, Senior Policy and Public Affairs Officer Wales at CIOB, said: “This survey shows that economic instability, planning delays, and late payments are creating real challenges for SMEs in construction. These issues cause project delays, undermining housing, health, and education delivery, while also damaging confidence in the sector.
“When SMEs struggle or collapse, the effects ripple through supply chains, clients, and communities, affecting thousands.
“With only 38% of survey respondents saying their invoices were paid on time, and within agreed terms, negative perceptions grow - discouraging people from joining an industry already facing a skills gap.
“This must change if the sector is to support Welsh Government aims and local communities.”
Notes to editors
- The FMB has conducted the State of Trade Survey for over 30 years. The refreshed 2025 edition now runs biannually with CIOB and is the only survey of its kind to focus exclusively on SME construction firms.
- The Q1–Q2 2025 survey received 458 responses, including 34 from Wales.