Glenigan’s August report finds that residential construction starts decreased by 26% but non-residential project starts fell by 38%.
The report suggests that in the third quarter, construction start performance continues to fall continuing a downward trend which have been consistent over the past year.
Allan Wilen, Glenigan’s economic director, said: “The disappointment continues as the market remains depressed, and given the unusual economic circumstances, this is hardly surprising. Uncertainty has stalled activity and many investors, public and private, are reluctant to commit to new projects.”
The report blames higher inflation, fluctuating interest rates and labour shortages, the trend is likely to continue due to the enforcement of Parts F and L as well as the introduction of tighter fire safety regulations.
“Furthermore, 12 to 18 months out from a General Election, it is likely the incumbent Government will adopt a more cautious approach, particularly to big infrastructure, in the lead-up. This will further slow activity in the short term,” explained Wilen.
Offices and Industrial and Hotel and Leisure construction both experienced poor periods with them both falling by 51% and 41%, compared to the previous year.
Wilen also said: “On the other hand, it was encouraging to see that private residential construction continues to rally, suggesting developers are altering their plans after a drop in starts during H.1 2023. The Home Office’s easing of visa restriction for construction trade may also improve staff recruitment and help lift activity further in the second half of the year.”
However, residential construction had an increase of 21% during the three months to the end of July but it remains 26% lower than a year ago.
Glenigan is a construction industry insight expert that provides year-on-year analysis, it gives built environment professionals an insight into sector performance.