Construction output shows signs of recovery
According to the latest ONS stats, construction is seeing the green shoots of recovery, fuelled by rising demand for new homes.
- Construction output grew by 0.9% in the month-on-month all work series in January 2021; this return to monthly growth follows the 2.9% decline in December 2020.
- The level of output in January 2021 was 2.6% below the February 2020 level; the level of new work was 6.4% below this level, while repair and maintenance work was 4.5% above this level despite a monthly fall.
- New work increased by 1.7% in January 2021 and was driven by private commercial and infrastructure, which grew by 4.5% and 3.1% respectively.
- Repair and maintenance decreased by 0.4% in January 2021 because of a 4.7% fall in private housing repair and maintenance, despite growth of 5.0% in public housing and 1.3% in non-housing repair and maintenance.
- Construction output grew by 1.7% in the three months to January 2021 compared with the previous three-month period, because of growth in both new work (2.2%) and repair and maintenance (0.8%).
Andy Sommerville, Director at Search Acumen, said: “This latest data reveals the impact the anticipated earlier end date for the Stamp Duty holiday has had on activity in the construction industry before the announced extension.
“The slight rise in new private housing construction output may be partly driven by strong buyer demand in the property market. Housebuilders may have been more responsive to push ahead with new construction projects to capitalise on higher buyer activity.
“The extension of the SDLT holiday into June and the tapering off of the threshold in September may incentivise firms to continue to push to complete projects.
“Buyer activity could remain strong in the medium to long term, driven in part by the pandemic changing consumer preferences toward favouring larger properties with access to green space and the weakening of ties to physical offices. Stronger willingness to relocate to areas beyond cities and commuter belts will create a more even distribution of demand for properties in different areas across the UK, offering housebuilders more possibilities over where to begin new projects.
“If there is a rise in buyer interest in areas not traditionally associated with high transaction levels, the property market will need to adapt to improve the accessibility and quality of housing location data so it is easily available to conveyancers, planners and prospective homeowners alike.”
Fraser Johns, finance director at Beard, added: “These latest figures, while positive for the future of the industry, suggest there is still a little nervousness in the market. The construction industry has already shown incredible resilience in the second half of 2020, and this 0.9% increase in output at the start of 2021 is welcome news. While we are clearly not out of the woods completely, the green shoots of recovery are beginning to show.
“It was only at the end of February that we received some clarity about the roadmap out of lockdown. Despite the construction industry remaining open throughout, some clients may have been hesitant to give the green light before they knew the timeline for a return to normal.
“The success of the vaccine rollout and the timeline now being in place should help confidence in the market grow in the coming weeks and months. As we enter spring, we expect demand to pick up quickly and bounce back as projects that have been on hold are given the go ahead.”
Source: Show House News
