There has been a large drop in the number of private residential starts and planning applications while more schemes are being put on hold, according to worrying new data
Industry tracker Glenigan reported that nationwide private residential starts for January 2017 had dropped 24 per cent compared with one year ago while the total value of work starting on site was down 9 per cent on January 2016.
A regional breakdown shows project starts falling by 15 per cent and 26 per cent in London and the South East respectively in the past 12 months.
The figures also show a significant decline in the overall number of planning applications submitted for major housing and commercial schemes.
In January 2017 there were 1,476 applications lodged for housing schemes with more than 10 units and non-residential projects with a construction value over £250,000. This is a drop of more than a 100 from January 2016 and a 25 per cent drop since June – the month of the Brexit vote.
Nationally the data also revealed that the value of work starting on site in the three months to 31 January was 9 per cent lower than during the same period a year ago. Meanwhile the number of major projects on hold had risen to 201 – the second highest number since May 2015.
However, Glenigan said that the slowdown was expected to be only temporary. Allan Wilén, Glenigan’s economics director, said that, while the decline in the value of work starting on site in the past three months was ‘disappointing’ the fall was ‘in large part due to a sharp drop in the value of private housing starts that is expected to prove temporary’.
He added that the sharp fall was prompted by fewer higher-value projects starting on site in London and the South East. ‘While conditions in the wider housing market are expected to be more challenging over the coming year, we still expect sector starts to stabilise over the coming months,’ he said.
On the positive side, the value of non-residential project starts was up 3 per cent on a year ago, which Wilén said was driven by an increase in public projects and a recovery in the industrial and commercial sectors following a post-referendum slump.
The value of starts in the East Midlands was 41 per cent down, while Scottish project starts were down a third.
However, the North East saw a 73 per cent rise in the value of starts.
Lindsay Urquhart, founder of recruitment firm Bespoke Careers, said that the drop in starts was reflected in a slowdown in the recruitment of architects.
She said: ‘The number of practices looking to hire in London in January and February 2017 has been less than it was this time last year.
‘It is by no means dead though, and those who are in a position to hire are securing fantastic talent.’
She added that larger commercial global practices seemed to have slowed recruitment more than medium-sized, design-focused firms.