After growing steadily for six months, the value of private housing starts fell in the three months to July according to the latest data from industry analysts Glenigan.
Around 1950 projects worth £1.4bn were started on site between May and July, compared to 2450 projects – with a value of £2.5bn – in the previous three months.
“Private housing had been a source of optimism as returning private sector confidence encouraged developers to invest in new work. The dip in the last three months highlights the fragility of the recovery,” said Glenigan economist James Abraham.
He continued “This latest data comes fast on the heels of the sharp 9% jump in second quarter construction output recorded by ONS. Second quarter output has been buoyed by the earlier rise in project starts and industry efforts to make up time lost to bad weather at the start of the year. The weakening in new project starts over the last three months points to an easing in construction output growth during the second half of this year.”
New social housing projects have fallen sharply, with the three months to July over 40% down on a year ago, according to Glenigan, as government funding dries up. A recovery is not expected for the sector within the next two years.
The Glenigan Residential Index for July, which tracks projects between the value of £250,000 and £100m, was 22% down on a year ago. Social housing will remain under pressure over the coming months, but a mild recovery in private housing starts is expected at the end of the year.
Glenigan said that while the decline in starts was not expected to continue to the end of the year, the slowdown has hit overall construction prospects.
Overall, the value of construction projects starting on site in the three months to July was 12% down on a year ago.