The UK residential construction and design sector enters 2026 on uneven footing, according to the 2026 Houzz UK State of the Industry report. While optimism is climbing among architects and interior designers, design and build firms remain more cautious, reflecting the varied experiences of 2025.

Architects and interior designers are showing renewed confidence, with 55% and 54% respectively reporting a good or very good outlook for the year ahead — a significant jump from 33% and 45% in 2025. By contrast, only 32% of design and build firms are similarly upbeat, with nearly half expecting a challenging year.

“The outlook for 2026 is far from uniform across the industry,” notes Marine Sargsyan, head of economic research at Houzz. “Architects and interior designers are more optimistic than last year, but design and build firms continue to navigate uncertainty. Rising costs and fluctuating demand are driving many to focus on efficiency and stronger sales strategies.”

Revenue and profit trends signal gradual recovery

Although 2025 was tough for many, the report highlights signs of easing pressure. Revenue growth is picking up, with 38% of businesses reporting increases (up from 34% in 2024) and revenue declines slightly down to 45% (from 47%). Profitability also shows modest improvement: fewer firms reported losses (47% vs 62% in 2024), while 27% recorded higher profits.

Operational priorities for 2026

Across the sector, firms are investing in efficiency and operational improvements. Streamlining processes is top of the agenda, with 65% of design and build firms, 57% of interior designers, and 56% of architects dedicating resources to productivity.

Design and build firms are also prioritising cost and risk reduction, while architects and interior designers focus on enhancing client and team communication. Refining the sales process emerges as a priority for all groups, reflecting the need to win new business amid persistent market challenges.

Rising costs, client challenges and staffing trends

Costs remain a major pressure: 90% of design and build firms, 86% of architects, and 68% of interior designers reported higher operating expenses in 2025.

Key drivers: Material and product costs top the list (52%), followed by marketing (40%) and software expenses (30%).

Finding clients remains a central challenge, with 55% of design and build firms, 50% of interior designers, and 48% of architects citing difficulty attracting new customers.

Staffing growth slows: Only 9% of firms added staff, compared to 15% in 2024, while 72% reported no change in headcount.

Houzz Pro: Supporting the UK Design Community

Houzz Pro, the leading all-in-one software for home construction and design, continues to empower professionals with project management, CRM, estimates, takeoffs, selections, 3D visualisations, and client collaboration tools. More than 3 million UK and global professionals, from architects and interior designers to home builders and design and build firms, rely on Houzz to manage projects efficiently and profitably.

The full 2026 Houzz UK State of the Industry report is available online.

At KBB 2026, MERLYN showcased a one‑off Pink Shower installation created in partnership with the Pink Ribbon Foundation. The special ARYSTO X Shower Enclosure served as a meaningful design statement to raise awareness around the importance of regular breast self‑checks – a simple routine everyone can incorporate into everyday life.

The ARYSTO X collection is designed to offer an uninhibited showering space that encourages relaxation, quality, and luxury. Created with wellness in mind, ARYSTO X complements the modern bathroom aesthetic while its ethereal simplicity helps create a calming space to unwind and recharge.

Marketing director, Eileen Slattery comments, “Our partnership with the Pink Ribbon Foundation allows us to shine a light on something incredibly important. The privacy of your shower makes it an ideal moment to pause and do a quick breast check. The pink ARYSTO X shower designed exclusively for KBB helped us raise awareness and normalise the conversation!”

Head of corporate partnerships, events & PR, Lisa Allen comments, “MERLYN has been a valued long-term corporate partner, and together we’ve been able to keep promoting the importance of breast cancer awareness. With around 55,000 people diagnosed with breast cancer in the UK each year, encouraging regular self-checks is vital, and the shower is one of the best places to do this.”

The company donates £25 from the sale of every ARYSTO X shower enclosure to the Foundation, directly contributing to breast cancer research and support services.

About MERLYN

MERLYN is renowned for pushing the boundaries of luxury bathroom design, delivering products that combine innovation with quality. Known for our award-winning designs and after sales service.

About the Pink Ribbon Foundation

About the Pink Ribbon Foundation: www.pinkribbonfoundation.org.uk The Pink Ribbon Foundation is a grant making trust with a mission to fund projects and provide financial support to UK charities which relieve the needs of people who are suffering from, have been affected by breast cancer, or who advance the understanding of breast cancer and its early detection

Villeroy & Boch has reported a resilient set of results for 2025, with group revenue increasing by 1.8% to €1,447 million, supported by acquisitions in what the company describes as a challenging trading environment. Operating EBIT remained stable at €97.8 million.

Gabi Schupp, chair of the management board of the Villeroy & Boch Group said, “For us, 2025 was all about strategic realignment. We have consistently honed our brand positioning while further strengthening our profitability. The acquisition of Ideal Standard has made us significantly more resilient in an economic environment that remains challenging. As a result, we were able to hold our own despite a general reluctance to spend and a weak construction sector.”

Bathroom & Wellness sees acquisition-led growth

The Bathroom & Wellness division – the group’s largest segment – recorded a 2.3% increase in revenue to €1,124.5 million, slightly ahead of the previous year despite continued softness in the construction sector. On a currency-adjusted basis, growth reached 3.4%.

EMEA delivered positive performance, while Asia Pacific and the Americas declined. Growth was led by taps, shower systems and sanitary ceramics, with new product development playing a key role. Highlights included ALU+ (manufactured from recycled aluminium), Vortex flushing technology, and ranges such as i.life, Architectura and Antao. Operating EBIT for the division held steady at €65.2 million.

Dining & Lifestyle holds steady in subdued retail climate

The Dining & Lifestyle division reported revenue of €319.8 million, up 1.0% (excluding licence sales), despite continued pressure on consumer spending.

A strong fourth quarter and new launches, including the Fleur collection, supported performance. Regionally, Asia Pacific and the Americas saw growth, while EMEA declined slightly. Notably, stationary retail partners delivered a 9.4% increase in sales, underlining the ongoing importance of bricks-and-mortar channels. Operating EBIT rose to €32.6 million.

Continued investment and dividend proposal

The group invested €45.8 million across the year in production facilities, retail infrastructure and intangible assets, reflecting an ongoing focus on operational efficiency and brand development.

A dividend of €0.80 per ordinary share and €0.85 per preference share will be proposed at the Annual General Meeting on 8 May 2026.

Cautious outlook for 2026

Looking ahead, Villeroy & Boch expects 2026 to remain challenging, citing geopolitical uncertainty such as the conflict in the Gulf, and continued market volatility. The group forecasts a mid- to high-single-digit percentage decline in sales, with operating EBIT expected to be between €75 million and €85 million.

The disposal of the Northern European operations of the Gustavsberg and Vatette brands (effective 1 October 2025) will impact year-on-year comparisons, with sales and EBIT in the first three quarters expected to fall below 2025 levels.

The business also expects ongoing pressure from integration costs and production realignment, while continuing to invest up to €50 million, including the rollout of SAP S/4HANA.