Residential sector leads overall slowdown

The value of work starting on site in the three months to September was 15% lower than during the same period a year ago, according to the latest Glenigan Index, with the residential sector leading the slowdown.

On a seasonally adjusted basis, starts were also 20% lower than during second quarter of 2017.

Private residential starts dropped 33% during the third quarter against both the previous three months and the same period a year ago. The decline follows a strong rise in project starts earlier in the year that had been a major source of support for overall construction starts.

The fall comes against a backdrop of a cooling in property transactions in the wider housing market. Social housing starts have been relatively steady, being 7% lower than a year ago.

Allan Wilén, Glenigan’s economics director, said: “The marked decline in private housing projects starting on site during the third quarter is a concern given the support the sector has recently given to construction starts overall.

“The level of starts has also been adversely effected by the continued weakness of public sector projects, which have been slow to recover from the disruption and delay of the snap general election.”

Overall, non-residential projects were 4% lower than a year ago and on a seasonally adjusted basis were 15% down on the preceding three months. The decline is attributable to falls in office project starts and persistent weakness in public sector funded areas such as health, education, and community amenity projects.

While industrial starts were 11% down on the previous three months, they were 26% up on a year ago; a period when many industrial projects were being reviewed during the immediate aftermath of the Brexit vote.

Similarly, hotel and leisure project starts remain ahead of a year ago.

The north of England and Scotland were among those parts of the country recording increased or stable project starts during the quarter. The value of project starts in Scotland was 9% up on a year earlier, while starts in the north east and Yorkshire and the Humber increased by 3% and 18% respectively.

Starts were also higher in the east of England (12%) and the south west (7%).

In contrast, the value of starts in London and the south east were sharply down on a year ago, dropping by 41% and 25% respectively.