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Construction starts drop 27% year-on-year

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Uncertainty in the aftermath of the General Election coupled with nose-diving social-housing activity has seen the value of major construction starts plunge since May

Industry analyst Glenigan’s latest UK Construction Index - which covers May, June and July - is down 27 per cent on the previous year. The index showed the commercial, public, industrial and civil engineering sectors all combining to drag the value of starts lower than a year earlier.

Glenigan said the fall was prompted both by decisions on government-funded projects being postponed in the immediate run-up to the election and by private developers delaying project starts until the political outlook was clearer.

Residential starts were down 21% year-on-year during the period, chiefly because of a ‘collapse’ in social-housing starts. Glenigan said the figures contained a ‘relatively modest’ 8% fall in private-sector starts.

Economics director Allan Wilén said that while weak start rates were a concern, an expanding development pipeline indicated the situation was a ‘continued overhang’ from the election rather than a weakening in client demand.

‘Confidence, which radiated out from London across the UK during the course of 2014, remains strong in the English regions, Scotland and Wales,’ he said.

Social housing starts declined by 40 per cent over the last three months

‘Social housing starts declined by 40 per cent over the last three months, as housing associations digest a new set of challenges to their business and funding models, including a mandated reduction in rent levels and the mooted extension of the right to buy to their tenants.

‘This will exacerbate what was already a fairly dreary outlook for social housing construction.’

Regionally, the North East saw a positive 13 per cent increase in starts during the three months to July. Everywhere else registered declines.

Glenigan Construction Index Bar Chart August 2015

Glenigan Construction Index Bar Chart August 2015




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