Project-starts, detailed planning approvals and main contract awards all fell in the three months to January against the previous three months and the preceding year.
Housing overview
Totalling £8.27bn, residential work commencing on-site during the three months to January decreased by a quarter against the preceding three months to stand 29 per cent lower than a year ago. Major project-starts (£100m or more in value) at £2.83bn, increased by 37 per cent against the preceding three months, but were 5 per cent down on the previous year. Underlying work starting on-site (less than £100m) totalled £5.433bn, a decrease of 26 per cent against the preceding three months on a seasonally adjusted (SA) basis and down 38 per cent against the previous year.
Residential main contract awards slipped back 29 per cent against the preceding three-month period and 17 per cent compared with the previous year to total £12.2bn. Underlying contract awards, at £10.876bn, decreased 19 per cent (SA) against the preceding quarter and 17 per cent compared with a year ago. Major contract awards decreased 72 per cent against the preceding quarter and 20 per cent against the previous year to total £1.327bn.
Like project-starts and main contract awards, detailed planning approvals experienced a decline: 17 per cent on the previous three months and last year, to total £11.064bn. Underlying project approvals at £9.707bn, decreased 5 per cent (SA) against the preceding three months and by 10 per cent compared to the previous year. Major project approvals fell 65 per cent against the preceding three months and almost halved from the previous year to total £1.356bn.
Types of projects started
Private housing accounted for about half of the total value of work starting on-site during the three months to January, with the value totalling £4.090bn. Private housing starts fell 19 per cent against the previous year. Private apartment work starting on-site fell 35 per cent against last year to total £2.796bn. The segment accounted for 34 per cent of project-starts during the period.
Social sector apartments (-75 per cent) and student accommodation (-68 per cent) project starts also weakened significantly against the previous year to total £198m and £239m, respectively. In contrast, social sector housing experienced growth (+27 per cent) against the previous year to total £757m, accounting for 9 per cent of the sector.
Regional
London accounted for the greatest proportion (37 per cent) of work starting on-site during the three months to January, totalling £3.061bn despite experiencing a 4 per cent decrease compared to the previous year’s levels. The Capital experienced the smallest decline compared to the other regions, making it the third best-performing area growth-wise. A further downturn was prevented by the commencement of a mega project worth £1bn, comprising of 950 residential and commercial units in Greenwich, as well as a £500m development of 985 residential units in Islington.
The South East also experienced a relatively small decline (-6 per cent) against the previous year, totalling £1.252bn with a 15 per cent share of the housing sector. Accounting for 4 per cent and 3 per cent of the sector respectively, the West Midlands (-73 per cent) and Scotland (-74 per cent) experienced much sharper contraction against the previous year.
In contrast, the North East experienced a very strong period for residential project-starts with the value increasing 42 per cent against the previous year to total £415m. It accounted for 5 per cent of the sector and was boosted by the £250m Housing Improvements project in Newcastle. Northern Ireland also performed relatively well, with project-starts rising by 23 per cent against the previous year to total £151m, a 2 per cent share of the sector. The two were the only regions that showed growth during this period.
London was also the most-active area of the UK for detailed planning approvals, accounting for 22 per cent of the sector. Like project-starts, London experienced a decline in approvals (-21 per cent) compared with a year ago to total £2.448bn. Project approvals included the £240m construction of 935 residential units and commercial space in Dagenham. The South East, on the other hand, had a period of growth, with the value increasing 16 per cent against the previous year to total £1.73bn. The region accounted for 16 per cent of the sector.
Yorkshire & the Humber showed impressive results with work starting on-site adding up to £1.08bn: 70 per cent growth compared with a year ago to account for 10 per cent of the sector. This makes it the third most active region, sharing the spot with the South West, where the value of planning approvals totalled £1.051bn, unchanged on the previous year. The North East was another region that experienced high growth in the three months ending January, with detailed planning approvals doubling in value and adding up to £404m, a 4 per cent share of the sector.
Despite a few areas experiencing growth, this wasn’t the case in most regions, which reflects the overall trend. The West Midlands accounted for 6 per cent of the total value and experienced a 50 per cent decline compared with a year ago to total £614m. The North West experienced a 40 per cent decrease in planning approvals compared to last year’s levels, to account for 7 per cent of the total value, which amounted to £752m.
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On January 1923, the United Kingdom’s construction industry showed a sustainable growth in their housing market.
New data from the Office for National Statistics (ONS) revealed that the construction output in Britain increased by 5.6% in January 2023, with a particularly impressive rise in housing starts. A total of 17,808 new homes were registered across the UK, 47.3% higher than the same month the previous year.
The latest figures come as good news for the construction industry, which has seen a consistent increase in new housing projects since last year. This is primarily driven by post-Brexit demand, as well as an increased focus on energy efficient construction methods.
It is also worth noting that January saw a jump in the number of construction permits granted in the UK as well. This suggests that the positive trends in the housing sector are likely to continue in the coming months.
Experts are also predicting that the UK will see a growth in the number of private rented sector housing, adding to the overall construction numbers for the year. This increase in demand is, in part, due to a population shift away from home ownership toward renting.
Overall, it is clear that the UK construction industry is heading in a positive direction. With the growth in housing starts, permits granted, and private rented sector housing, it seems that the year is off to a strong start. It remains to be seen, however, if this trend is sustainable, or if the industry will suffer a downturn in the later months of the year.
