Private housing construction grows in Q1, despite overall industry decline

Private housing construction grows in Q1, despite overall industry decline

Construction output in the private housing sector climbed 1.4% in the first quarter of this year, with £8.2bn of work carried out.

This was despite overall construction output declining over the same period.

From January to March 2024, overall construction output decreased by 0.9% according to the Office for National Statistics’ figures published today (10th May). 

Total monthly construction output volume is estimated to have fallen by 0.4% in March.

However, new work in private housing alone was up 3.5% in March, equating to almost £2.8bn in work.

In contrast, construction output in the private commercial sector was up just 0.1% in March on the previous month, and down 5.3% on the previous quarter with just under £5.6bn of work between Jan-March 2024.

This was broadly reflected in repair and maintenance data over the quarter. The value of this work in private housing was up 4.9% in Q1, with £2.8bn of work carried out in March alone.

For non-housing sectors, there was a 3.3% reduction in such activity.

In its analysis, the ONS anecdotally attributed the fall in quarter-on-quarter construction output growth to negative effects of “adverse weather” in February and March, with heavy rainfall delaying work.  

Despite the rise in construction of new private housing in Q1 2024 compared to Q4 2023, activity in March was down by 10.7% compared to the same month in 2023.

An annual decline of 4.4% was registered for new construction work in the private commercial sector during March.

“Housebuilding has been a point of contention for developers, especially with councils cutting back on targets and a continued lack of government support, however, there could be progress made here as we near election season,” said Terry Woodley, managing director of development finance at Shawbrook.

“The Labour Party have already published plans to increase housebuilding by developing brownfields or ‘grey belt’ land, and there’s no doubt that other political parties will follow suit and publicise their plans for tackling the housing crisis.

“That being said, there’s a kernel of hope for the infrastructure sector due to the publication of the National Infrastructure and Construction Pipeline from Whitehall, which outlined plans to spend £775bn on infrastructure across both the private and public sectors over the next decade and could prove to be a promising avenue for developers.

“Those feeling cautious about their next steps should seek the advice of a broker to ensure they are in a good position to take on their next project.”

Brian Berry, chief executive at the FMB, added: “It is concerning to see another month of declining construction output with a drop of 0.4%.

“This is driven by declines in new work and, worryingly for small builders, repair and maintenance.

“This tops off a bad first quarter where the sector had decreased overall output; likely because of the bad weather.

“Hopefully, builders can now make the most of the warmer months and, with the economy climbing out of recession, we may see homeowners with a bit more cash to commit to new projects.”

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