Construction Booming But House Building Still Slow

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The latest ONS monthly construction figures show output has grown by 0.4% in volume terms in November 2024; this follows an upwardly revised decrease of 0.3% in October 2024.

This increase in monthly output came from rises in both new work (0.3%) and repair and maintenance (0.5%).

Meanwhile, Glenigan has revealed a 20% uplift in construction project starts in 2024 over 2023.

The Office for National Statistics says that at the sector level, five out of the nine sectors grew in November 2024; the main contributors to the monthly increase were private commercial new work and non-housing repair and maintenance, which grew by 3.1% and 1.1%, respectively.

Construction output is estimated to have increased by 0.2% in the three months to November 2024; this came solely from an increase in new work (0.4%), as repair and maintenance was flat (0.0%) over the period.

Gareth Belsham, a director of Bloom Building Consultancy, told TheInstaller.pro & TheFabricator.pro that: “After a few bruising months, construction has jumped into pole position as the best performing sector of the economy. “Output across the industry rose by 0.4% in November, four times faster than the UK economy as a whole.

“But for all the surface sheen, the official data is far from a clean bill of health. Fortunes within the construction industry are diverging rapidly.

 

Housing stuck in reverse

“Private sector housebuilders built 1.2% less in November than they did in October and new home construction as a whole is stuck in reverse. On the other side of the coin, commercial projects are booming on the back of rising demand for office space as employers seek to get more of their staff back into offices full time.

“The surprise fall in inflation, coupled with wider GDP growth, should support fragile business sentiment and sustain this commercial sector momentum in coming months.

“But the outlook for housebuilders is far less rosy. High interest rates are still making it expensive for residential developers to buy land and build homes. Consumer demand is patchy too, making the contrast between residential and commercial construction acute.”

 

Glenigan 2024

Overall, work commencing on-site averaged £10,372 million per month, up 20% from 2023. Major projects (£100 million or more) saw an extraordinary 58% increase, underscoring renewed confidence in large-scale developments. Meanwhile, underlying project-starts (£100 million or less) edged up by 1%. Hotel & leisure construction starts soared by 30%, while underlying education projects rose 7%. Civil engineering also flourished, with infrastructure (+17%) and utilities (+14%) leading the charge. Detailed planning approvals struggled, falling 19% overall, with major projects hit hardest at a 34% decline. Underlying approvals dropped by 6%.

 

Residential

Residential construction starts experienced a challenging year, finishing 4% lower than 2023 levels. Private housing starts were down 9% compared to 2023, while social housing declined 10%, highlighting ongoing affordability and funding challenges. The industrial sector had a modest growth year, with starts growing 4%. Community & amenity construction also rose to stand 11% higher than 2023. Curiously, despite a ‘back to the office’, push performance was poor in the office sector, recording a 19% decline year-on-year. Civil engineering thrived, with starts in the sector finishing 16% up on the year before. Infrastructure projects rose 17%, while utilities saw a 14% increase year-on-year. 

Comment

Allan Wilen, Glenigan’s economic director, says, “Despite Budget constraints and concerns over tax changes dampening growth in late 2024, the outlook for 2025 is positive.

“Increased government and household spending, as projected by the OBR, will likely provide a much-needed boost across key construction sectors, particularly private housing, retail, and leisure. Private housing is expected to see a 13% growth in project starts, with build-to-rent and SME-focused initiatives broadening development activity.”

 

Picture: Construction has moved into positive growth territory but housing development is still very slow – but Glenigan and the Office for National Statistics are confident that 2025 will see the start of a house building boom.

Article written by Cathryn Ellis
22nd January 2025

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