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Labour Provides Hope To Build The Homes The UK Needs
Labour’s proposed planning reforms offer the best hope to build the homes we need, the Federation of Master Builders says. And the National...
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House Building Still On A Nosedive
The latest figures from Glenigan suggest that construction performance is in a slower rate of decline after a protracted period of steep decline – but house building is still plummeting.
Residential construction starts were down 11% on the preceding three months and a whopping 21% down on 2023 figures.
The figures are revealed in the June edition of Glenigan’s Construction Index which focuses on the three months to the end of May 2024, covering all underlying projects, with a total value of £100m or less, with all findings seasonally adjusted.
It is a report that provides a detailed analysis of year-on-year construction data, giving built environment professionals a solid insight into sector performance over the last 12 months.
The June Index reveals that overall sector decline is gradually levelling out and that, whilst undoubtedly lower than 2023 figures, equilibrium is returning in line with a slowly stabilising economy.
Glenigan’s Economist, Drilon Baca, says: “A return to a period of relative stability will be welcomed across the sector. However, with a General Election exactly on the horizon, we need to approach these figures with an element of caution. Whatever the results it will have a considerable effect on industry behaviour, particularly in the private sector, either prompting a spurt of activity or a resumption of the pausing and delays commonplace over the past 24 months. In the public sphere, much will depend on the policies announced in respective manifestos and what the victorious party, or parties in a hung Parliament, choose to prioritise.”
Housing
Private housing performance fell 23% compared to the previous year and 15% against the previous three months to May. Social housing, having consistently posted poor results, experienced a small reversal in fortunes, jumping 1% compared to the preceding three months. However, this little increase wasn’t enough to stop it from finishing 16% lower than 2023 levels.
Others
Hotel & leisure was the stand-out performer, rising 39% against the preceding three months and 23% up on the previous year.
Education also returned a strong set of results, with the value of starts increasing 14% on 2023 levels, up an impressive 35% on the previous three months.
It was a mixed bag for community and amenity starts which, despite decreasing 36% against the preceding three months, increased 39% on last year. Similarly, if less severely, retail starts dipped a modest 3% during the Index period, finishing a solid 37% higher than 2023 levels.
Industrial starts experienced a poor period, with the value of starts decreasing 29% during the three months to May, 56% down on a year ago.
Health starts also had a sluggish Index period, down 2% on 2023 levels, and 25% compared to the preceding three months. Likewise, office starts tumbled 18% against the previous three months and 14% on last year’s figures.
Comments
Atul Kariya, head of construction and real estate at MHA: “The rise in construction PMI data to 54.7, the fastest in two years, is very positive news for the sector. After months in the doldrums, there are definitely green shoots visible, which should continue throughout the summer months, as it typically does as construction output increases.
“Our clients are telling us that things are slowly, steadily and cautiously starting to fall into place after a period of uncertainty, which will enable them to start making longer-term decisions.
“While the announcement of the election has come as welcome news as it hopefully will provide some stability after July 4 it is surprising that with housing being one of the major components of the UK economy, there has so far been very little debate about how any of the parties are planning to deal with some fundamental challenges in the sector – not least the significant shortfall in trained, younger workers.”
Michael Wynne, director of the sustainable housebuilder Q New Homes:
“Housebuilding is finally coming out of the deep freeze. While it’s still lagging behind the rest of the construction industry, residential building has inched back into growth territory.
“But this is still a thaw rather than a rebound. After months of contraction, housebuilding output is only expanding slowly. Nevertheless the mood among housebuilders is improving, as the headwinds that held back our industry for so long begin to ease.
“Building cost inflation – which wiped out many smaller players’ profit margins during the dark days of 2023 – continues to soften.
“And while interest rates remain high, it’s now a question of when, not if, they come down. In time this will make it easier for developers to purchase land and build new homes and make those homes more affordable for buyers.
“The prospect of a more builder-friendly Government, and a rationalisation of Britain’s dysfunctional planning system, is also putting a spring in the step of many builders – pushing confidence up to a three-month high in May.”
Picture: The construction sector appears to not be in such a steep decline. Many housebuilders are hopeful of a post-election boosts.
Article written by Cathryn Ellis
18th June 2024