The value of UK housing projects starting on site has dropped for the first time in 18 months, according to the latest figures from construction analysts Glenigan.
The Glenigan Index for October, which covers projects breaking ground during the three months to September, rose by 2% compared to a year earlier. However the underlying value of residential starts fell by 6%.
Private housing project starts increased by just 1% in the third quarter of the year, compared to the same period in 2013. This, combined with a 17% fall in social housing starts, dragged the Glenigan Residential Index into minus figures for the first time since April 2013.
The figures follow the release of the latest Nationwide House Price Index on Tuesday (30 September) which reported a 0.2% drop in UK house prices in September, fuelling fears of a property market slowdown.
Allan Wilén, Economics Director at Glenigan, said: “Despite signs that the breakneck growth in house prices and purchasing activity is easing, market conditions remain positive for house builders.
“Signs of a stabilisation in new project starts underlines the challenge the government faces in meeting housing need.”
He added: “With social housing seeing a 17% fall in the value of starts in the latest quarter, an increasing share of the UK’s housing supply is dependent on the private sector.
“The planning pipeline suggests that house builders are taking up the challenge, with 54,600 private housing units approved in the second quarter - up 28% on the previous quarter and 71% higher than a year earlier.
“However this rapid improvement was in part due to the approval of several major schemes, including more than 6,700 units at the Earls Court redevelopment in West London, and it will be a number of years before these are fully realised.”
Non-residential activity remains more positive, with the retail sector seeing a 54% rise in starts driven by developments such as the £80 million Banbury Gateway retail park in Oxfordshire (Glenigan Project ID: 11400282).
Parts of the UK which have been slowest to see sustained construction recovery are now catching up. All three Northern English regions saw starts rise for the fifth consecutive month, with the fastest rates of expansion in Wales and Northern Ireland.
London and the South East have been at the forefront of the construction recovery and both saw further improvements during this latest period. However the rest of England failed to keep pace with the level of starts seen a year ago when private housing schemes fuelled a rapid upturn. Starts in the Midlands fell back slightly, with steeper declines in the East and South West of England.
The monthly Glenigan Index is based on extensive research of every construction project starting in the UK over the previous three-month period, providing an indicator of developing activity and future output in the industry.
