Housing starts underpin growth in construction

Published:  03 January, 2013


Underlying construction activity bounced back in November 2012 according to Glenigan, with private and social housing showing the strongest growth. Overall, the Glenigan index of project starts was up 3% for the three months to November compared to the same period in 2011. Underlying new work for private housing was up by 50%.

There was also a turnaround in project starts for social housing in November. New work jumped by 11% in the three months to November following seven months of straight decline.

Andrew Whiffin, Glenigan economist, comments, ‘Private housing construction continued to go from strength to strength in the latter part of the year. It looks like the flood of measures put in place by the Government over the past year are beginning to have a sustained positive impact on the housing market and construction activity.’

On social housing, he comments, ‘The steep increase this month has a lot to do with the weakness of the sector at the end of last year rather than any strength in the latest data. Fundamentally, little has changed, and cuts to capital budgets will continue to weigh heavily on the sector.’

The growth in housing masked the slump in retail activity that began in September and continued in November, with new projects down 36% compared to the same period last year. Andrew Whiffin comments, ‘Retail-sector projects have been dominated by the supermarket chains in 2012. Their expansion programmes drove growth over the first half of the year, and it is the throttling back of these programmes that has led to a slowdown as we head into 2013.

The slowdown in public-sector work also continued in November. Education starts were down 31% , and community and amenity were down 20%. Government cutbacks and a lack of private-sector investment incentives will continue to be the main hurdles to project starts across these areas well into 2013.

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