Builders' Merchants News

Residential construction up 9%

Published:  02 July, 2012

UK: A 40% year on year increase in the value of private housing construction project starts for the three months to June outweighed the 21% decline in social housing project starts for the same period. "This strong growth has resulted in 9% year on year growth for residential construction as a whole for the three months to June," commented James Abraham, economist, Glenigan.

Overall construction projects starting on site in the three months to June fell 3% year on year according to the latest Glenigan Index. "This is the second consecutive fall that we have seen this year. Increases in private housing, industrial, office and retail construction project starts were not strong enough to outweigh the falls in social housing, education, health and community & amenity starts.

"The increase in private housing building seen over the first half of the year will slow over the next six months. We do expect this year to be a growth year, though poor household earnings growth and potentially flat house prices will hamper the pace of any rebound in the underlying value of starts. Government cuts will result in continued decline in social housing activity for some time," said Abraham.

He continued "The cuts in government spending will continue to restrict the number of new build education projects coming through the development pipeline and we expect to see an increase in refurbishment projects as a result. Though the level of health projects has remained resilient so far, we expect a shrinking flow of work over the next eighteen months."

There will continue to be a high level of infrastructure investment, particularly concentrated in the south of England. Crossrail will provide rail related work, while there may begin to be a lift in spending on the road network.