ANALYSIS: The slew of newly released statistics paint a confused picture about how the economy - and the construction industry - has fared since the Brexit vote
In the last few days a wave of new figures have been released which claim to show how the country is either suffering - or prospering - following the Brexit vote in June. It is unclear that they really mean - and indeed whether it is too early for them to mean anything at all.
Actual statistics and figures based on sentiment are also getting confused. For instance the RIBA’s Future Trends survey - a monthly gauge of the profession’s workload confidence - reveals a surprise return to optimism among architects.
Adrian Dobson, executive director of members at the RIBA, said: ’Last month our key workload confidence index experienced a dramatic post-referendum decline in sentiment, and the bounce-back this month seems to reflect other economic indicators and surveys, which have also broadly painted a brighter picture than in the immediate aftermath of the historic Brexit decision.’
But contrast this with analysis coming from the experts trawling through the, usually quarterly, data on actual projects and those in the planning system. Earlier this month industry tracker Glenigan revealed its first set of meaningful statistics since the nation voted to leave the EU.
According to its data crunchers, the value of UK project starts fell by seven percent in the three months to August compared with the same quarter the year before. Worryingly, in the same period, the construction value of non-housing schemes were 13 per cent down on a year ago and 24 per cent lower than during the March to May 2016.
The potential development pipeline remains firm
Digging into these non-residential figures, it emerged that office project starts had plummeted to half the level seen in the preceding three months and were down 43 per cent on 2015.
The residential picture, on the other hand, was rosier. Despite a 15 per cent dip from May, Glenigan reported that the overall value of housing starts was actually up by three per cent on 2015.
Commenting on the figures, Allan Wilén, Glenigan’s economics director, said: ’The seven per cent decline in project starts reflects, in part, the impact of the related political and economic uncertainty on investor nerves.
’In contrast to the recent slowing in project starts, the potential development pipeline remains firm. The value of projects securing detailed planning approval during the first eight months of 2016 is 3 per cent up on a year ago.
’However the strongest growth in approvals has been in those sectors where project starts have been most affected by referendum uncertainty; private housing, industrial and commercial developments.’
Interestingly Glenigan only blames this recent slowdown ‘in part’ on the political situation. A glance at the figures over the last decade show that the peak value of project starts was actually back in January 2015 and that the lowest point in recent times was in December the same year.
Glenigan value of proejct starts
To support this, in July, John McRae of ORMS insightfully pointed out that Brexit had only ’crystallised some of the uncertainty that has been around the property market for the past six to nine months.’
What is more, these topline Glenigan figures only reflect the direction of the industry on a national level. Regionally the situation varies massively.
At the beginning of September the NHBC revealed its latest figures for the number of new homes registered in the UK. Nationally 10,533 new homes were registered in July 2016, compared to 15,151 in the same month in 2015.
But comparing similar rolling quarters from 2015 to 2016 (May-July), there had been a significant growth in registrations:the North East (+28 per cent), Yorkshire & Humberside (+25 per cent) and the South West (+11 per cent).
The housing situation in London, in contrast, seems less healthy.
According to new research by residential property consultants JLL, the number of new-builds and planning applications for homes in the capital had ’dropped like stones’ during 2016.
For the first two quarters of 2016 the number of starts on site for residential schemes in London was down 58 per cent, with only 3,670 units started over the period compared with 8,750 in the last half of 2015.
Planning applications, JLL uncovered, had also dropped significantly to 8,240 in the first six months of 2016 combined - down 17 per cent from 9,870 in the last two quarters of 2015.
Jll london new housing figures
Again JLL blamed a number of factors for the apparent development slowdown - the EU Referendum being only one of them.
While the Brexit situation may have ’distracted’ the market, the property consultant highlighted how the sales market had already beginning to ease during the latter half of 2015 and that construction activity appeared to have reached a post-recession peak.
The market, JLL added, had then been stunned by the 3 per cent additional stamp duty tax, which was confirmed in former chancellor George Osborne’s March Budget.
To muddy the waters further, new data by the Office for National Statistics (ONS) seem to show the Brexit vote has had little impact on the UK economy.
The ONS’ chief economist Joe Grice said: ’The referendum result appears, so far, not to have had a major effect.’
However a number of sources have told the AJ that the real impact of the EU Referendum vote, and the potential knock-on effect on workloads and practices, may not be truly known until early next year.
Until then Brexiteers and Remainers will pick what they want out of the figures.