The UK construction industry has seen a sharp 21% decline in the start of new projects in 2024 compared to the previous year – this is particularly troubling considering the country’s significant need for more houses.
According to research from Glenigan, a company that provides insights on construction, many construction projects have been scaled back due to increased borrowing costs and a decreased demand for new projects.
The monthly average value for work beginning on construction sites during the last three months until April was £7,211 million, showing a 10% drop from the previous three months and a steep 21% fall from the same period last year.
There was a notable decrease in major project starts, with a 21% fall from the previous period and a significant 34% decline from last year, 2023.
Allan Wilen, Glenigan’s Economic Director, mentioned: “The number of projects starting is having difficulty keeping up with last year’s figures, as the sector faces challenges from high interest rates.”
He added that reduced activity, especially in critical areas like housing, is impacting the industry’s potential for a quick recovery.
There was also a reduction in major planning approvals, down 34% from the previous period and showing a 12% decline in value compared to last year.
Residential project beginnings declined by 16% in the three months leading up to April, resulting in an 18% decrease compared to last year. Private housing took a 14% hit from the preceding period and is down 17% from 2023’s numbers.
Social housing starts experienced the largest drop within the residential sector, declining by 21% from the previous three months and down by 19% from last year.
Regional Performance
Not all regions in the UK performed the same, with some areas showing signs of activity.
Northern Ireland performed strongly with a 20% increase from the preceding three months and a significant 33% rise year-on-year, thanks in part to a surge in hotel and leisure construction, contributing to the region’s growth.
On the other hand, the North East had a small 2% decrease in the value of project starts, but it saw a notable 38% increase when compared to 2023.
Wales experienced the steepest decline, with the value of starts almost halving by 44% from 2023 and dropping by 37% from the preceding three months. The East Midlands also suffered, with a 43% decrease from last year and a 33% fall from the period leading up to April.
Other areas, including London, the South East, the West Midlands, the East of England, Yorkshire & Humber, and Scotland all showed declines both over the period and in comparison to 2023 figures.
