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Housebuilding stalls after a summer boom

After a positive summer for housebuilding with more than £7 billion of housing contracts awarded between June and August, the sector experienced a cooler autumn with figures decreasing by 10% and falling for the second month in a row. 


The latest edition of the Economic & Construction Market Review from industry analysts Barbour ABI, highlights the levels of construction contract values awarded in October across all regions of Great Britain. The overall contract value for October was £7.1 billion based on a three month rolling average, a small increase on September but the highest total monthly construction figure for almost two years. The large HS2 contracts commissioned in September worth £7.2 billion alone are still having a major impact on overall figures, masking the slide in housing construction contract value. 


Across the industry, project numbers were down in October by almost 10% when compared to the same time last year, indicating that a number of larger projects were awarded within the month rather than a large succession of smaller contracts.  It was a mixed bag for various sectors this month with industrial and medical & health construction joining housing as sectors that saw a drop in contract value, at 16.2% and 9.9% respectively. Whereas infrastructure, commercial, retail and education all saw slight increases on the month and hotel, leisure and sport construction saw a major increase in monthly contract value of more than 50%. 


Regionally, London took back the top spot with 25% of the total construction contract value from the West Midlands, which benefited greatly in September thanks to the HS2 contracts. Joint second was the South East which contributed 14%, which included the £40 million McArthurGlen Retail Outlet in Kent, alongside the North West which had the biggest residential project in October, the aforementioned Portugal Street project in Manchester. 


Commenting on the figures, Michael Dall, Lead Economist at Barbour ABI, said: “It’s evident that the major HS2 projects commissioned in September are masking an underlying softening of activity in certain sectors of construction such as housebuilding. Housing has been driving overall industry growth across 2016 and parts of 2017 as infrastructure lagged behind but is now flagging. Without the HS2 developments we would be looking at a much bleaker picture in our results for October.”


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