Construction output is estimated to have increased by 0.8% in Q3 2024, according to the latest data from the Office for National Statistics (ONS). The increase was due to a 2% rise in new work with repair and maintenance work falling by 0.6%.
Monthly construction output is estimated to have grown by 0.1% in volume terms in September 2024 due to a rise in repair and maintenance (0.4%) as new work fell by 0.2%.
Four out of the nine sectors grew in September 2024 with the main contributor to the monthly increase being private housing repair and maintenance, which grew by 1.3%.
Total construction new orders fell 22.0% (£2,722m) in Q3 2024 compared with Q2 2024. Private new housing and private commercial new work fell 31.3% (£861m) and 20.8% (£786m), respectively.
The annual rate of construction output price growth was 2% in the 12 months to September 2024.
Clive Docwra, managing director of property and construction consultancy McBains, said: “Today’s figures are a mix bag for the industry. The good news is that construction outperformed the economy as a whole over the third quarter of the year, seeing an 0.8% increase in output compared to the 0.1% in GDP overall.
“On the downside, the September figures for construction show a slowdown in growth of just 0.1% compared to August. Furthermore, after housebuilding had seen a recent mini-resurgence, figures show private housing new work in September dropped by 0.4%, while private commercial work fell by 0.1%.
“These decreases could have been as a result of uncertainty ahead of the Budget with investors holding off on decisions until the picture becomes clearer. An interest rate cut in December is also looking unlikely because of concerns that the borrowing spree outlined in the Budget will fan inflation so costs are likely to remain high, putting some major projects out of commission for the time being.
“However, our clients in many work sectors are still feeling bullish for the long term, and will be hoping this represents merely a blip in the recent recovery.”
Josh Ward-Jones, director of Bloom Building Consultancy, added: “After a weak first half of the year, construction has surged to become the fastest growing industry in Britain’s slowing economy. But construction’s bragging rights come with caveats. The expansion posted in the third quarter came after three successive quarterly falls, so while the turnaround is welcome, total output is still down on where it was at this point in 2023.
“There’s also a two-speed feel to the industry data, with private sector housebuilding stuck in reverse as high interest rates continue to hold back developers’ willingness to buy land and build homes. The picture is even more alarming when you look at the pipeline. The value of new orders placed by private sector housebuilders fell by a third on the quarter, and is down by a painful 34.4% compared to Q3 2023.
“Such a sharp slowdown in developer demand for residential construction underscores the huge task the chancellor faces in her quest to re-energise housebuilding. Labour has promised to ‘get Britain building again’ and get 1.5 million more homes built in England over the next five years. The sector now awaits with interest the planning reforms and release of green belt land the government says will kickstart housebuilding in areas where people want to live.
“Things are more positive in commercial real estate. New orders for commercial construction in the third quarter were up a modest 2.8% compared to Q3 2023, but levels of repair and maintenance work rose strongly. On the front line we’re seeing strong demand from commercial property landlords keen to invest in repair and refurbishment to generate extra value from existing buildings.
“Infrastructure and civil engineering builders are licking their lips at the prospect of the huge projects announced in last month’s Budget, but for many housebuilders the elephant in the room remains the high cost of borrowing and all eyes will be trained on the Bank of England to see if it will reduce interest rates further to help boost Britain’s flagging economy.”
