The value of residential project starts fell by 2% in October against the previous three months, suggesting construction activity is currently in a state of stagnation.
This also represents a reduction of 9% from 2023 levels.
The analysis comes from Glenigan, a provider of construction project sales leads.
Allan Wilen, Glenigan’s economic director, said, “many will be disappointed that the hopes of revival, often heralded by the election of a new government, have not yet come to fruition. Confidence remains low in the private sector, not helped by the prospect of the upcoming Autumn Budget Statement, which many see sweeping changes to tax and planning policy.
nvestors are, understandably, cautious. Likewise, a lack of clarity on public sector spending has also pushed back project start dates and left some up in the air altogether.”
The North East and Wales experienced the greatest falls in project-starts against the preceding quarter, cascading 44% and 36%, respectively. Both regions also plummeted on the previous year, declining 39% and 47%.
Yorkshire also performed badly, with project-starts falling 28% against the preceding quarter to stand 16% lower than a year ago.
The value of starts in London declined 9% against the preceding three months and remained 26% down on the previous year.
However, there were a few bright spots. Project-starts in both the South West (+14%) and Northern Ireland (+7%) grew against the preceding three-month period, advancing 13% and 42% against a year ago, respectively.
This was also the case in the East of England, which experienced an increase against both the preceding three months (+8%) and the previous year (+14%).
Wilen added “everyone will be on tenterhooks to see what will come out of the Spending Review, but this is still months away and leaving many high and dry. It makes an uncertain situation even more precarious, and the sector is in a delicate position, highlighted by the collapse of ISG and its subsidiaries last month.
“However, the sector has weathered far worse storms than this, and it was encouraging to see Hotel and Leisure starts way up on previous figures, hinting at a much-needed revival in one of the UK’s hardest-hit verticals. Hopefully, clarity on the announcements will help to assuage the unease, which is having a significant knock-on effect on almost every other vertical, dampening overall construction-starts.”
Labour housing targets look tougher still – & the builders blame Tories
The number of homes and sites gaining planning approval have continued to plummet for yet another quarter.
Data from construction consultancy Glenigan – analysed by the Home Builders Federation – that the 12 months to June saw the fewest new home permissions granted for over a decade.
The HBF says while Labour’s speedy progress made on planning policy is welcome, further interventions in other areas, in particular to boost demand by helping people to buy will be needed.
The HBF pins the blame firmly on the Conservatives, saying: “As a result of the previous Government’s approach to house building, in particular with regards to planning, the number of permissions for both building sites and actual homes in England have been on a downward trajectory for the last two years. Record lows have been hit in each quarter. In the last 12 months, just over 230,000 units were granted planning permission, the lowest figure for any 12-month period in the last decade.”
The federation says that looking back to the late 2010s, when housing supply was at its peak of around 240,000 homes a year – but still well below the target of 300,000 set by successive Governments – the number of units being approved in a 12-month period was consistently around 100,000 or 45% higher.
A new pipeline report from the HBF finds that:
- 10,400 sites were approved in the year ending June 2024, the lowest figure for any 12-month period since 2006;
- This is a 10% drop on the same period last year, and a 53% drop on the peak in 2008. This is also a 7% drop on the previous quarter and a 9% drop on the same quarter last year;
- The number of units being approved also reached a record low. 53,379 units were approved during Q2 2024, the lowest quarterly figure since 2014. This is a 3% drop on the previous quarter and a 13% drop on Q2 of 2023;
- The drop in approvals was more severe in certain regions. In London, units approved dropped 20% on the previous quarter and by 42% compared to the same quarter last year. At 6,159, the quarterly total was the lowest since 2012 and at 40,466, the 12-month total was the lowest since 2013;
- The North East and East Midlands also saw significant drops compared to the same period last year, at 50% and 42% respectively.
The HBF believes that the housing industry has welcomed the recent announcements from the Labour Government to reform and speed up the planning process, and reverse the damaging anti-development changes made to the National Planning Policy Framework by the previous government, including reinstating the requirement for Local Authorities to plan for the number of homes their communities actually need.
However, despite these very positive and swift interventions, the report illustrates that the scale of the challenge that remains is huge.
Planning permissions will need to increase by 55% to reach the Government’s new annual target of 370,000 new homes.
To achieve this and meet its housing supply ambitions, it is also paramount that the Government’s reforms go beyond just the planning system.
The HBF pulls no punches when it says “the increasingly unaffordable cost of home ownership is stifling the market and it is the first time in decades there is no government support in place for aspiring home owners. The industry needs a level of confidence in demand to commit to make the significant investment in land, planning permissions and people needed to build more new homes.”
Chief executive Neil Jefferson says “the steep fall in planning permissions starkly illustrates the challenge the new Government faces to boost housing supply. Whilst the speedy interventions on planning are very welcome, there are a number of determinants on housing supply levels.
The lack of affordable mortgage availability means more support for buyers is needed. Creating demand for new homes provides the confidence the industry needs to invest and deliver both private and affordable homes.
Building the homes we need will generate hundreds of thousands of jobs, create investment in communities and economies in every region and deliver the growth the country desperately needs. The upcoming budget provides an opportunity for the Government to take more positive steps to address the mounting housing crisis and to commit to their pledge to get Britain building again.”