The latest ONS figures show that construction output in January fell by 0.2% and by 0.8% compared with one year earlier. In addition, the ONS’s orders data indicate that construction new orders in Q4 were 0.5% lower than Q3 but 1.4% higher than a year ago.
Professor Noble Francis, economics director at the Construction Products Association, said: “The fall in the ONS’s construction output in January was disappointing but largely reflects the impacts of poor weather at the start of the year with floods in many parts of the country. In addition, skills shortages in sectors such as house building have meant that project costs have risen and affected the viability of sites.
“This fall in output is expected to be a temporary, however, and the ONS’s construction new orders data suggest that activity should increase significantly during 2016. Although new orders in Q4 were 0.5% lower than in Q3, they were still 1.4% higher than a year ago. Furthermore, new orders can be volatile, so it is better to look at the data within the context of the year as a whole. New orders in 2015 were 2.8% higher than in 2014.
Corry Bourke from Urban Exposure, a residential development finance provider, said: “Construction output continues to slide which does not paint a positive picture for the UK housing market. The UK is failing to build enough homes that it so desperately needs with significant constraints around planning, access to finance, a shortage of key materials and a skilled workforce. The figures chime with Housing Starts in the UK decreasing to 31,000 in the fourth quarter of 2015, down from 36,530 in the previous quarter and below the average of 38,203.09.
“Today’s numbers reflect a dampening of confidence in the UK construction sector, with firms becoming naturally wary of investing or expanding due to uncertainty over the upcoming Brexit vote. However, unless more is done to boost construction of new homes, the gap between supply and demand will continue to rise, forcing up house prices and pricing many out the market.
“Public housing starts fell by 10.6% in January, so it will be interesting to see what impact the government’s initiative to directly commission the building of homes on publicly owned land will have in reversing this downward trend.”