Glenigan: Housebuilding starts are down by 55%.
According to Glenigan data, the decline in private homebuilding starts was caused by “an unpleasant combination of economic stagnation, strangled supply chains, and double-digit inflation,” and it was 55% lower than it had been a year earlier.
In its June second quarter building Review, the building data company also notes that private residential on-site starts were 13% lower than the three months ending in May.
The second three months of the year saw “mixed results” across the board for the building industry.
According to the research, “Construction-start performance stabilised during the three months to May, thanks largely to growth in major office, residential, and civil engineering projects, but remained down on last year as the industry continues to face difficult trading conditions.”
According to the report, construction starts increased overall by 10% from the previous three months but were still 37% fewer than they were a year ago.
Main contract awards, however, decreased by a fifth in the previous three months and were 37% lower than they were a year before.
It continues that although detailed planning approvals were up 9% from a year ago, they were down 14% from the previous quarter.
According to data released last month by the Office for National Statistics, inflation decreased to 8.7% in April, which was higher than expected by economists. Due to supply limitations, price pressure in the building sector is greater than the UK average.
According to Glenigan Economic Director Allan Wilen, “It’s not unexpected that construction starts are still down in comparison to 2022 activity, which benefited from a fictitious uptick as developers hurried to start construction projects on-site before stricter regulations took effect.
“The present economic stagnation, congested supply chains, and double-digit inflation are terrible combinations.
The anticipated, exorbitant interest rate increases will also have a negative impact, holding down construction, particularly in the private home market, which will be hurt by skyrocketing mortgage costs.
But there is a gleam of hope at the end of the tunnel, Wilen continues. A pipeline of forthcoming work is slowly filling, which is anticipated to support the industry in the long run, according to a minor increase in project starts in the three months leading up to the end of May and an increase in planning permission.