Construction project-starts plummeted by -47% to the end of January 2023, compared with the preceding three months to stand one-third lower than a year ago, according to the February edition of the Construction Review from Glenigan, the construction insight and intelligence provider.
Construction-starts remained weak throughout the three months to January, with main contract awards and detailed planning approvals also slumping as the UK continues to weather persistent economic downturn.
Sustained external pressures on the UK construction industry include rising interest rates on the home front, inflated building materials prices, and rocketing energy costs caused by the war in Ukraine, as well as UK Government economic decisions taken in the latter half of 2022, which dented investor and consumer confidence.
Main contract awards dropped 21% against the preceding period, to stand 16% lower than the same time a year ago. Detailed planning approvals also fell back against the preceding three months (-17%) to finish flat against the year before.
However, while the value of major project contract awards did fall 31% against the preceding three months, the value increased by almost a fifth (17%) against the previous year. Similarly, major planning approvals were up by over a third (34%) on 2022 levels.
Residential starts remained depressed at the outset of 2023, falling 26% during the index period to stand 38% lower than a year ago. Private housing was 34% down on the previous year and 28% lower than the three months to January. It was an equally grim outlook for social housing, where project start levels dropped by a fifth compared to the preceding three months and plummeting by 49% against 2022 figures.
Regional performance was poor, with a couple of exceptions. The North East performed relatively well, with project-starts increasing 20% during the three months to January but remaining 16% down on the year before. The South East followed a similar trend, with the value of project-starts advancing 19% against the preceding three months but remaining 9% behind the previous year. London (-23%) and the South West (-24%) performed particularly poorly against the preceding three months, falling back 36% and 39% against a year ago, respectively. Some regions fared worse still, including Scotland, where the value of project-starts fell 45% against the preceding three months to stand 42% down on the previous year’s levels. The East Midlands, West Midlands and the North West also suffered falls in project-starts against both the preceding three months and previous year.
Glenigan’s Economic Director, Allan Wilen, said: “Starts on site are softening and, as global and national disruption continues, we’ll likely see contractors adopting a cautious and retrenched approach, pushing back start dates until the economic landscape looks less hostile. Rising mortgage rates, falling real wages and poor consumer confidence is likely to cause a further downturn in activity, but that’s not all. Many built environment professionals are still getting to grips with recently introduced regulations, particularly Part L of the Future Homes Standard, and the enforcement of the Fire Safety Act. No doubt this will also set back residential starts for the foreseeable future as developers seek to comply with tougher specification requirements.”