Home Improvement Makes Last Minute Market Leap

• Browse By Section
• News
• Home Improvement Makes Last Minute Market Leap

Construction output took yet another bashing as 2023 ended with housebuilding almost on its knees according to the Office for National Statistics. However, the stats show the repair, maintenance and improvement market making an unexpected leap. 

The ONS stats run for three months to November 2023. Construction output saw new work decrease by 0.6% but new housing decrease by 3.9%. Repair and maintenance increased by 3.8%.

Michael Wynne, co-founder of the housebuilder Q New Homes, says: “Housebuilders faced a perfect storm of weak demand and surging input costs during much of 2023. IIn November private sector housebuilding contracted by a further 3.9%, more than any other construction subsector.”

Hope

Wynne adds: “Despite the figures, there’s a growing sense that the industry’s dark clouds are finally, slowly, starting to part. The new year began with a flurry of interest rate cuts from high street lenders and the prospect of more affordable mortgages should help buyer demand recover in 2024.

“In fact there are signs that this has already begun, with Persimmon, one of the industry’s biggest beasts, reporting a modest uptick in house sales at the end of 2023. But with most developers planning 18 months to two years ahead, we’ll need to see a sustained increase in buyer demand before we can declare the worst to be past.

 “Meanwhile on the supply side, challenges remain. Skilled tradespeople remain in short supply in many areas, with lead contractors and developers having to work hard to find and retain the people they need. As a result, margins are likely to stay squeezed for the foreseeable future.

 “Nevertheless, there have been some positive movements on building materials. Softer demand has reduced average delivery times and even the costs of several key materials, so on balance the sector is beginning 2024 in a better place than the ONS’s November 2023 data might suggest.”

Glenigan

Glenigan’s January 2024 edition of its Construction Review focuses on the three months to the end of December 2023, with a year-on-year comparison. Its central finding is that starts continued to decline during Q.4, primarily as the result of the immense economic pressure. Overall, project-starts fell by a fifth (19%) compared to the preceding three months’ performance. Furthermore, figures stood a third (-31%) lower than the same period in 2022.

A Glenigan economic director, Allan Wilen says: “Poor construction performance in Q.4 can be attributed to persistent, external economic pressures which are weighing the industry down. High interest rates, declining business investment, as well as the expected Christmas slowdown led to pauses and delays in project-starts as we came to the end of 2023.

“There was a softening in both main contract awards and planning approvals which aligns with the general, downward pattern of UK economic activity and a febrile political environment, less than a year away from a General Election. However, it’s not all doom and gloom. A rise in private housing projects is a positive sign, suggesting developers’ expectations for the housing market in 2024 may be on the up.”

Residential starts increased 14% during Q.4 2023, but stood 8% lower than a year ago. Private housing was the major contributor to residential-starts improvement, rising 19% in Q.4, but weakening by 9% on 2022 levels.

Social housing faltered (-2%) against the preceding quarter, with performance also dipping by 5% compared to last year.

Picture: The Office for National Statistics says the RMI market showed unexpected growth at the end of 2023.

www.glenigan.com

Article written by Cathryn Ellis
02nd February 2024

Share

Related Articles