Housebuilding output holds steady in uncertain times

November 11, 2019 / Isla MacFarlane
Housebuilding output holds steady in uncertain times

Despite the prolonged pain of Brexit uncertainty, housebuilding seems to have held its nerve over the last few months, with output inching upwards.

According to the latest ONS data, construction output increased by 0.6% in Quarter 3 2019 (July to September) compared with the previous quarter, partially reversing the decrease of 1.2% in Quarter 2 2019.

Furthermore, the value of new work output increased by £367 million. This growth was driven by private new housing, which increased by £156 million.

According to Neil Knight, business development director, Spicerhaart Part-Exchange & Assisted Move, the long-term trend paints a favourable picture. He said: “These numbers suggest it’s very much ‘steady as she goes’ in the new housing sector.

“The month-to-month figures are more or less flat from August to September but looking at the quarterly data the picture is one of solid growth: new private housing is up 1.8% in Q3 compared to Q2, and 2.3% on Q3 last year.”

Other highlights from the data include:

  • Growth in Quarter 3 2019 was driven by a rise in new work of 1.4% but offset slightly by a fall in repair and maintenance of 0.8%;
  • In new work, most sectors saw an increase with private housing (1.8%), private commercial (1.5%) and private industrial (7.2%) contributing significantly to the rise in Quarter 3 2019;
  • In repair and maintenance, the fall in Quarter 3 2019 was driven by a 3.0% decline in private housing and to a lesser extent a decline of 0.3% in non-housing;
  • Construction output decreased by 0.2% in the month-on-month all work series in September 2019; this was driven by a fall of 2.1% in repair and maintenance, which was partially offset by a rise in new work of 0.7%.

Infrastructure appears to be the star performer, which is also good news for housebuilding industry which relies on good connections to unlock new sites.

For new work, output increased by £62 million in September 2019. This was driven largely by infrastructure, which increased by £114 million – the largest monthly increase since January 2017 – with a smaller positive contribution from public housing new work, which grew by £13 million in September 2019.

Elsewhere, private industrial new work, private commercial new work and private new housing saw relatively smaller decreases of £28 million, £17 million and £16 million respectively.

Caroline Gumble, Chief Executive at the CIOB, said: “It’s good to see that there is growth in the sector, albeit at a slower rate than earlier in the year. The CIOB has recently written about what we believe the industry needs from the next government. In order to maintain stability within the sector we want to see leadership and commitment at a Ministerial level, support for the industrial strategy and further investment in the regions.

“Securing a pipeline of well-planned projects and supporting jobs across the UK should be a priority for the next government, and based on today’s figures, pursuing these strategies will lead to all around improved economic performance.”

On a monthly basis, the numbers aren’t so encouraging. Total all work decreased to £13,631 million in September 2019 compared with August 2019, falling by 0.2% (£33 million). However, this was driven by a 2.1% fall in repair and maintenance, with new work offsetting this decrease slightly with an increase of 0.7%.

Growth rates were also negative across all sectors apart from infrastructure and public new housing, which increased by 2.4% (£13 million) in September 2019.

While these numbers may not look too impressive on paper, against the backdrop of continued political and economic uncertainty they illustrate an industry holding its own in challenging times.

“That’s not going to set the world on fire but in the context of considerable uncertainty in the market and in the wider economy, it’s a stable foundation on which to build and means we can look forward to the new year with a sense of guarded optimism,” said Knight.

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