Residential sector rises amid overall decline in UK construction starts

In the latest release of its Construction Index, Glenigan, a leading insight expert in the industry, has provided an in-depth analysis of the construction sector’s performance over the last year. The January 2024 edition of the Index meticulously covers projects valued at £100 million or less, with seasonally adjusted data up to December 2023.

The report emerges as a beacon of hope, marking a cautiously optimistic start to 2024 after a challenging 2023. Despite a seasonal decline in project starts towards the year’s end, an adjustment for seasonal factors reveals a 4% increase in starts compared to the third quarter of the previous year. Notably, the private residential construction sector displayed a robust performance, contributing to a 14% surge in the overall residential sector in the fourth quarter.

However, the optimism is somewhat restrained by an overall 20% decrease in starts compared to 2022, with most non-residential sectors experiencing a significant downturn. Allan Wilen, Glenigan’s Economic Director, commented on the mixed picture, noting the seasonal impact on work commencement but highlighting the modest rise in private housing projects as a sign of emerging confidence among developers. He expressed concern over the declines in non-residential and civil engineering project starts, indicating potential challenges ahead for the construction sector. The upcoming Spring Budget is highly anticipated, especially with expectations for the Government to provide clarity on major infrastructure projects announced in 2023.

The report provides a detailed sector and regional analysis. In residential construction, there was a 14% increase in starts during the fourth quarter of 2023, though this was still 8% lower than the previous year. Private housing showed a 19% increase compared to the preceding three months but was down 9% year-on-year. Social housing, however, continued to struggle.

In the non-residential sector, the community and amenity, retail, and hotel and leisure categories showed strong results. However, industrial, office, education, and health projects all saw significant declines compared to the previous year.

Regionally, London and the South East showed positive growth, while the East of England and the South West experienced declines. Scotland’s performance remained flat, and Northern Ireland, the East Midlands, Wales, Yorkshire & the Humber, and the North West saw notable decreases in project starts compared to 2022.

This comprehensive report from Glenigan offers a nuanced view of the construction sector’s trajectory, reflecting both the challenges and the pockets of resilience within the industry.”