The construction sector saw a sharp decline in major project starts in the three months to January, with few schemes over £100m breaking ground, according to Glenigan’s Construction Review.
According to the latest report, released this month, this has contributed to a 19% drop in total project-start value, despite underlying growth in smaller developments, particularly in private housing.
Adding to the challenge, the review says the development pipeline has also weakened, with fewer main contract awards and planning approvals. This points to the likelihood of further declines in both large-scale and smaller project starts in the months ahead.
However, recent interest rate cuts and the prospect of a gradual economic recovery may help to restore investor confidence as the year progresses.
When it comes to housing, there were 12% fewer housing starts compared with the same period a year earlier, according to Glenigan’s latest data.
However, project-starts on housing projects jumped 19% from November 2024 to the end of January this year, highlighting quarter-on-quarter recovery.
Private housing accounted for the lion’s share (69%) of overall project-starts, growing 39% year-on-year to a total value of £8.05 billion. In contrast, private apartment construction struggled, falling 48%, while student accommodation saw modest growth of 3%, buoyed by a handful of large schemes.
Underlying projects (<£100m) also performed particularly well, up on both the preceding year and the previous quarter.
It provides a more optimistic outlook for the housing market than the latest S&P Global PMI data, which suggested that total housebuilding work fell for the fourth successive month in January.
Allan Wilen, Glenigan’s economic director, said: “While housing projects are still lagging compared to last year, the government’s focus on housebuilding and increasing consumer confidence should help form a growing development pipeline. The key will be translating this potential into actual construction starts.”
Image credit: SFIO CRACHO/Shutterstock
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