Construction output in Q1 of 2018 was 3% below that of a year ago, with public housing contributing most to the fall – while private housing showed healthy growth again
The latest figures from the Office for National Statistics showed UK GDP grew by 0.1% quarter-on-quarter in Q1, in line with the preliminary estimate. This is the smallest increase in more than five years and represents a 0.1% contraction on a per-head basis. In the rest of 2018, GDP growth is expected to remain muted in line with constrained consumer spending.
Between January and March of 2018 total construction output fell 3% to £38.26bn (in 2015 prices) compared with the same period in 2017. Public housing contributed to this with a 7% drop to £1.27bn. The sector is expected to grow by 3% annually on average over the next three years. Falling investment due to Brexit uncertainties could undermine social housing providers’ ability to raise finance. While recent government announcements of plans to boost council housebuilding will drive some modest uplift in the forecast period, sector weakness is expected to persist, with near-record low orders in Q1 undermining prospects for 2018 in particular.
In new work, private housing posted the joint strongest year-on-year growth (alongside industrial), rising 6% to £8.44bn, making it the largest new work sector for the 10th consecutive quarter. The sector is expected to keep growing over the forecast period, albeit at a slower annual rate of 3%. Recent data on job creation and wage growth has been positive, but the impact is outweighed by high household debt, while stricter lending criteria and higher transaction costs continue to depress demand. The sector outlook is positive but restrained, though house price growth is still expected to average 2.8% a year up to 2020.
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