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04/08/2016

Residential starts down on last year - Glenigan

Words: Laura Edgar

Figures show construction starts in the three months to July are up across the UK compared with the same period a year ago. Residential starts, however, are down.

The figures consider the period running up to and the immediate aftermath of the European Referendum.

Released this week, the Glenigan Index: July 2016 states that in the three months to July, construction starts were up by 12 per cent when compared to the same period in 2015, but were down by 32 per cent on the previous three months.

Additionally, residential starts were 10 per cent lower than a year ago and 36 per cent down on the preceding three months.

Non-residential project starts were down by 9 per cent on the same period on 2015 and 20 per cent lower than February to April 2016. Office project starts dropped 38 per cent against February to April and were 32 per cent down on last year.

The index also notes that the value of work starting on site in the July period as being down on the same period a year ago.

Allan Wilén, economics director, Glenigan’s, said high levels of political and economic uncertainty during the three months to July prompted many private sector investors to defer investment decisions, contributing to the recorded drop in project starts.

“Non-residential project starts were particularly weak, due to fewer office, hotel and leisure and industrial projects commencing on site. This, combined with a fall in civil engineering project contributed to the overall decline in the index against both the preceding three months and a year ago,” he said.

“The three months to July also saw a 10 per cent drop in residential project starts, as a slowing in private sector work combined with weak levels of social housing starts.”

However, Wilén said the potential development pipeline remains firm, with the value of projects securing detailed planning approval during the first half of 2016 up 5 per cent on last year.

He said the “strongest growth in approvals have been in those sectors where project starts have been most affected by referendum uncertainty; private housing, industrial and office developments”.

“The political outlook has begun to become clearer in recent weeks, following the appointment of the new Prime Minister and cabinet. Nevertheless we anticipate that the uncertain economic and political outlook will continue to disrupt the progress of some projects to work on site. Accordingly, we expect an overall weakening in project starts during the second half of 2016,” Wilén concluded.

Image credit | Shuttershock

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