Private housebuilding starts slumped by 55% compared to a year ago, data from Glenigan shows, hit by “an unpleasant combination of economic stagnation, strangled supply chains, and double-digit inflation”.
The construction data firm adds that private residential on-site starts were 13% lower than the three months to the end of May, in its June second quarter Construction Review.
Across the whole of the construction industry, the sector showed “mixed results” over the second three months of the year.
The report says: “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.”
It says construction starts across all areas lifted by 10% against the previous three months but stood 37% lower than a year ago.
However, main contract awards fell by a fifth in the preceding three months and were 37% lower on a year ago.
It adds that detailed planning approvals rose 9% on a year ago, but fell by 14% on the preceding quarter.
Inflation fell to 8.7% in April, according to the Office for National Statistics last month, but was higher than economists had forecast. Price pressure in the building industry is higher than the UK average, due to supply shortages.
Glenigan economic director Allan Wilen says “It’s unsurprising construction starts are continuing to decline compared to 2022 activity, which enjoyed an artificial boost as developers rushed to move building works to site ahead of tighter regulations coming into force.
“Here and now, there’s an unpleasant combination of economic stagnation, strangled supply chains, and double-digit inflation.
“The predicted, eye-watering interest rate increases will also have a deleterious effect, keeping construction on the back foot, especially in the private residential market which will suffer from soaring mortgage rates.
Wilen adds: “Nevertheless, there’s a glimmer of light at the end of the tunnel. A modest lift in project starts in the three months to the end of May, as well as planning approval increases, suggest a pipeline slowly filling with upcoming work, likely to buoy the industry in the longer term.”
