Construction output declined in the second quarter of this year, dragged down by a fall in new private housing.
According to ONS data, construction output decreased by 1.3% in Quarter 2 (Apr to June) 2019, compared with the previous quarter, largely reversing the increase of 1.4% in Quarter 1 (Jan to Mar) 2019.
The fall is reflective of the downward trend seen since the highs of January and February 2019.
In new work, the decrease of 0.5% in Quarter 2 2019 was driven by declines in public other new work and private new housing, with public other new work seeing its largest quarter-on-quarter decline since quarterly records began, with a fall of 10.9%.
New work fell by £143 million, with private new housing being one of the main contributors to the decline.
Construction output decreased by 0.7% in the month-on-month all work series in June 2019; this was due to a 2.0% decline in repair and maintenance along with flat growth (0.0%) in new work, largely driven by a fall in new private housing.
Matthew Pratt, Chief Operating Officer at Redrow, said: “Compared to what we’re experiencing, it’s somewhat surprising to see output in new private housing down on the month across the board. This is disappointing but we should see the uplift in year-on-year new work figures as a positive, indicating a continued appetite for new homes which housebuilders are rising up to meet. Over the last few years, the UK housing market has come face-to-face with a number of challenges as a result of government policy and economic uncertainty, from reforms to stamp duty to confusion on how Brexit will further impede on our current skills shortage. The housebuilding industry is working hard to meet government’s ambitious targets but, to be successful, housebuilders need to operate in an environment where they can invest with confidence.
“Although Brexit should be a priority for Boris Johnson, the property market needs to be high on his agenda. Boris’ efforts in stimulating the London market during his time as Mayor of London should put him and his cabinet in fairly good stead to manage this. Yet, if we are to see an immediate impact, we need to have greater clarity and confidence in initiatives such as the Help to Buy regional price caps. Stamp duty charges have also put a strain on the market for some time now, and so we hope to see him follow up on his intention to abolish the tax on homes under £500,000 as outlined in his campaign. This would unlock much needed-homes across the country for first time buyers and get the market moving again.”
Andy Sommerville, Director of Search Acumen, added: “UK construction continues to run, but nobody seems to know what on, or indeed, for how long. Elsewhere this week, experts have been discussing a potential crisis hitting the property market in twelve weeks’ time as UK markets continue to bristle with anxiety ahead of the Brexit deadline.
“A similar situation presents for the state of construction: it has slowed and the possibility that building might come to a standstill after October still looms large. A no-deal scenario is not of course the only outcome and construction may well get a new impetus once the industry knows how Brexit will turn out and is able to prepare accordingly.
“In the meantime, we mustn’t despair at the dampened activity and instead take August to rest, to regroup and prepare – if we play our cards right, we can land on our feet.”
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