Social housing starts on site have plummeted by more than a third in a year, new data has revealed, with an analyst saying the Grenfell Tower tragedy could be a major factor.
According to construction economics unit Glenigan, the value of public sector residential projects beginning in the three months to the end of January 2018 was 40 per cent lower than in the same period a year earlier.
The Glenigan Index – which excludes very big and very small schemes – registered a 7 per cent drop in the value of starts across the overall residential sector over the same timeframe.
However construction levels of private homes has edged up.
‘Encouragingly, an improvement in the private housing sector during the closing months of last year continued during January,’ said Glenigan economics director Allan Wilen. ’Private residential starts were 9 per cent higher than during the same period a year ago.
’In contrast the smaller social housing sector has continued to fall away… being 40 per cent lower than a year ago.’
Wilen said the London tower block blaze that claimed 71 lives last summer could be a major factor in falling project numbers in the public residential sector.
’The current weakness may in part be a repercussion from the Grenfell fire tragedy, with social landlords either delaying projects for additional design reviews or potentially the available funds for new developments being squeezed as budgets are redirected towards improvements to the existing housing stock,’ he said.
Meanwhile, separate figures from the Chartered Institute of Procurement and Supply (CIPS) and research firm Markit showed housebuilding levels had dipped for the first time since the summer of 2016.
The Construction Purchasing Manager’s Index (PMI) showed a reading of 48.1 for housing activity in January, where 50 represents no change from the prior month.
The drop in output comes after 16 months of successive growth in residential activity levels.
Total construction work was broadly flat in January from December, reading 50.2.
CIPS director of customer relationships Duncan Brock said: ‘The construction PMI delivered meagre results for January as any hopes for a stellar start to the year were eclipsed by a surprisingly poor show from the housing sector, offering its worst performance since July 2016.’