Construction gets off to a shaky start in 2018news
26th February 2018
Growth in the UK’s building industry has suffered a continuous fall in 2017, according to the Office for National Statistics (ONS).
However, owing to a surge in growth in the first quarter (Q1) of 2017, the year has managed to show 5.1% growth overall. Q1 2017 marked the end of a period of growth in construction with a drop in all subsequent quarters of the year.
Data obtained from the ONS revealed a £238m or 0.7% total drop in Q4 - representing the most sustained decline in quarterly construction output since 2012.
While the value of private housing construction increased by £403m during Q4 (the highest level ever recorded), the value of private commercial work declined by £324 compared to Q3.
Senior Economist at the Construction Products Association (CPA), Rebecca Larkin, said: “Overall growth in construction activity slowed significantly over the course of 2017, with output falling since Q2 and rising only 0.9% in annual terms in Q4. The quarter saw continued growth in private housing driven by five years of the Help to Buy equity loan, and early work on major projects such as the Thames Tideway Tunnel driving a 0.7% rise in infrastructure.
“However, even with the government’s £7.4 billion equity loan outlay so far and a further £10 billion set aside, house building activity could not offset the broad downturn in R&M, commercial and industrial.”
Construction woes continue with faltering faith in the sector too.
The government’s ambitious target of delivering 300,000 new homes per year is also in doubt, with only 12% of surveyors believing the aims will be fulfilled, according to a recent audit by the Royal Institute of Chartered Surveyors (RICS). Many are concerned over the prospect of construction skills due to the end of free movement of labour from the EU.
Naismiths Managing Director, Blane Perrotton, commented: “Brexit uncertainty continues to weigh on the sector, but there’s now a new joker in the pack – interest rates.
"With the Bank of England signalling that rates will rise sooner and quicker than previously expected, there’s a risk the residential success story could be derailed.”
Written by Ian Johnson