The UK construction industry has seen a significant downturn in 2024, with the number of new projects commencing dropping by 21% compared to the previous year. This decline is particularly alarming given the existing shortage in housing supply across the nation.
Research conducted by the construction intelligence firm Glenigan has highlighted a concerning trend of cutbacks in construction projects. This downturn is attributed to rising borrowing costs and weakened demand, casting a shadow over the industry’s near future.
Quarterly Overview
From January to April 2024, the monthly average value of construction work commencing on sites was approximately £7,211 million, marking a 10% decrease from the last quarter of 2023 and a 21% decrease compared to the same period last year. The fall in major projects was even more pronounced, with a 21% drop from the previous quarter and a 34% year-on-year decline.
Allan Wilen, Glenigan’s economic director, provided insights into the challenging environment: “Project-starts are struggling to match last year’s levels, as the industry continues to be plagued by uncomfortably high interest rates. Additionally, significant reductions in workloads, particularly in residential construction, are hampering short-term recovery.”
Planning and Residential Starts
The downturn has not spared the planning stages of construction projects either. Major planning approvals during the same period fell by 34% against the preceding quarter, with their value dropping by 12% compared to last year. Residential construction starts, a critical sector for addressing the UK’s housing crisis, saw a 16% decline over the three months ending in April 2024. This represents an 18% decrease from the previous year, with private housing and social housing starts down 14% and 21%, respectively.
Regional Disparities
While the overall picture looks grim, some regions showed signs of resilience or even growth. Northern Ireland, for instance, witnessed a substantial 20% increase in construction starts over the last quarter and a remarkable 33% rise from the previous year, fueled by a surge in hotel and leisure projects.
Conversely, Wales faced the steepest declines, with construction starts nearly halved compared to 2023 and dropping by 37% from the previous quarter. The East Midlands also experienced significant setbacks, with a 43% year-on-year decrease.
Other regions, including London, the South East, West Midlands, East of England, Yorkshire & Humber, and Scotland, all recorded declines during the period, further illustrating the widespread impact of the current economic conditions on the UK construction industry.