Private housing starts defy the blues gripping UK’s construction sector

NEW activity in the UK construction sector slumped by more than a tenth in the last quarter, despite government efforts to stimulate the industry.

The Glenigan Index shows the underlying value of UK construction projects started in the three months to September was 11 per cent down on a year ago.

Allan Wiln, economics director at research firm Glenigan, said the only sub-sector that showed significant positive signs was residential building, as private sector homebuilders take forward new sites in anticipation of improved market conditions in the new year.

The figures show that the underlying value of private housing starts rose by 30 per cent year-on-year during the quarter.

“In contrast, the index of
social housing starts for September was 5 per cent down on a year ago as housing associations have reshaped their development programmes in response to reduced government funding,” Wiln said. Overall, residential starts were up 15 per cent year-on-year.

Despite the UK government’s attempt to revive the sector with guarantees for up to £40 billion towards infrastructure projects announced in July, lower public sector spending dragged on the figures for non-residential construction. Non-residential starts fell 25 per cent, with industrial, retail and leisure projects all significantly lower.

However, Glenigan said a 14 per cent drop in civil engineering “should not be taken as a weakness”, as a large amount of work in the pipeline in the energy, waste and transport sectors pointed to an improved outlook.

Hopes that the UK emerged from recession in the last quarter were boosted by the latest business survey from Lloyds, which shows confidence holding at the previous month’s high points.