Construction output sees Autumn fall
The latest ONS reporting on construction output has revealed a fall in activity over Autumn 2023.
The three months to November saw a decrease of 0.6% in construction activity. The decrease came solely from a 3.6% drop in new work, as repair and maintenance increased by 3.8%.
Monthly construction output was also revealed to have decreased with a 0.2% fall in volume terms in November 2023. The decrease in monthly output came solely from a decrease in new work (2.0% fall), as repair and maintenance increased by (2.1%).
The monthly fall is November followed an upwardly revised decrease of 0.4% in October 2023, with the monthly value in level terms in November 2023 at £15,571 million, revealing a stutter in construction levels over the Autumn.
Looking at sector level, three out of the nine sectors saw a fall in November 2023. As shown in the PMI figures, the main contributor to the monthly decrease was new housing at 3.9%, while infrastructure new work also decreased at 2.0%.
The slowing in the housing industry was also reflected across the housing market throughout the end of the year.
Reports from the industry suggested the slowdown was the result of adverse weather, including heavy rainfall and strong winds in November 2023, leading to delays in planned work.
Michael Wynne, Co-founder of the housebuilder Q New Homes, commented: “Housebuilders faced a perfect storm of weak demand and surging input costs during much of 2023, and in November private sector housebuilding contracted by a further 3.9%, more than any other construction subsector.
“But despite the cold conditions on building sites this week, there’s a growing sense that the industry’s dark clouds are finally, slowly, starting to part.
“The new year began with a flurry of interest rate cuts from high street lenders, and the prospect of more affordable mortgages should help buyer demand recover in 2024.
“In fact there are signs that this has already begun, with Persimmon, one of the industry’s biggest beasts, reporting a modest uptick in house sales at the end of 2023.
“But with most developers planning 18 months to two years ahead, we’ll need to see a sustained increase in buyer demand before we can declare the worst to be past.
“Meanwhile on the supply side, challenges remain. Skilled tradespeople remain in short supply in many areas, with lead contractors and developers having to work hard to find and retain the people they need. As a result, margins are likely to stay squeezed for the foreseeable future.
“Nevertheless, there have been some positive movements on building materials. Softer demand has reduced average delivery times and even the costs of several key materials, so on balance the sector is beginning 2024 in a better place than the ONS’s November 2023 data might suggest.
“Looking ahead, 2024 is likely to see intense competition as housebuilders fight for market share as both demand and supply become more free-flowing.
“To succeed, developers will need to identify not just the right areas, but also the right design features, to win sales in the recovering new-build market.
“With many buyers focusing not just on upfront cost but also the ongoing cost of ownership, energy-efficient homes are likely to be in high demand, as will designs that use modern, sustainable methods of construction to reduce carbon while maximising quality and comfort.”
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