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Housing construction starts plummet

Housing down downturn drop
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The value of residential construction work beginning on site has dropped by a tenth in a year, new research has revealed

Economics unit Glenigan calculated a 10 per cent fall in the size of registered project starts across the UK between the first quarter of 2018 and the same period this year.

January to March 2019 was the 20th consecutive rolling quarter during which the value of new housing work was lower than a year previously - the worst run since records began in 2006. 

The industry tracker’s research - which ignores very big and super small schemes - showed an 8 per cent decline in the value of private residential starts over the last 12 months; and a 15 per cent reduction in social housing projects getting under way.

‘Project starts have progressively declined since last autumn against a backdrop of fewer property transactions and weaker house price inflation in the wider housing market,’ said Glenigan economics director Allan Wilén.

‘Political and economic uncertainties are expected to continue to dampen housing market activity and private housing project starts in the near term.’

The overall Glenigan Index – which also takes into account civil engineering and non-housing building schemes – was 6 per cent lower in the first quarter of 2019 than the same period last year.

‘Residential and non-residential construction work weakened during the first quarter as poor economic growth and Brexit uncertainty continued to deter private sector investment in new projects,’ said Wilén.

There was something of a north/south divide in fortunes.

Across all sectors of construction, London, the South East and the South West saw increases of 13 per cent, 12 per cent and 19 per cent respectively in the year to the start of 2019.

But the North East, North West, West Midlands and Scotland all saw declines of 20 per cent of more. In the East of England, starts fell by 35 per cent. 

Meanwhile separate figures from the Chartered Institute of Procurement & Supply (CIPS) with research body IHS Markit showed a marginal increase in the overall value of housing work carried out last month.

The UK Construction Purchasing Managers’ Index gave a reading of 52.5 to the residential sector in March, making it the only sector of the industry to register above the 50 ‘no change’ mark.

Employment and new orders were also slightly improved, while optimisim about future prospects unexpectedly soared to 64.3 on the index.

But overall construction activity was down in March and CIPS director Duncan Brock saw little cause for celebration, pointing out that respondents to the survey had blamed Brexit for ’continuing inertia’.

’Not a small rise in job creation, optimism and new orders, nor resilient house building, were enough to buck the underlying downward trend in a sector suffering from client hesitation and consumer gloom,’ said Brock.

’There was also intense competition from other sectors, with the stockpiling of supplies increasing delivery times again and creating raw material shortages, all adding to pressures. Given the lack of warehousing space in the UK and the difficulties of storing bulky items, it is evident the sector has pressed the panic button in its attempt to keep projects moving during the political impasse.

’It is unlikely that next month will bring about any positive news, given the challenges of a weaker UK economy, volatile pound and intense competition for new orders as Brexit continues to cast a long shadow over the sector’s future.’

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