Copy article

Construction data - October 22

ended 12. December 2022

The ONS this morning published a report about construction data. Key points below. Newspage sought the views of property experts.

  • Monthly construction output is estimated to have increased 0.8% in volume terms in October 2022; this is the fourth consecutive monthly growth, with October 2022 being the highest level of construction output (£15,248 million) since records began in January 2010.
  • The increase in monthly construction output in October 2022 came from increases in both new work (0.5%) and repair and maintenance (1.3%) on the month. 
  • At the sector level, five out of the nine sectors saw a rise in October 2022, with the main contributors to the monthly increase seen in private new housing, and non-housing repair and maintenance, which increased 2.9% and 1.7%, respectively.
  • The level of construction output in October 2022 was 4.8% (£698 million) above the February 2020 pre-coronavirus (COVID-19) pandemic level; new work was 0.2% (£21 million) above its February 2020 level, while repair and maintenance work was 13.5% (£677 million) above the February 2020 level.
  • Alongside the monthly increase, construction output saw an increase of 1.1% in the three months to October 2022; this is the twelfth consecutive period of growth in the three-month-on-three-month series, and the increase came solely from growth in new work (3.1%) as repair and maintenance saw a decrease (2.1% fall).

4 responses from the Newspage community

Copy all

Star Quote
Copy

Dorian Payne
Managing Director at Castell Group
It's good to see the overall data showing construction output is increasing, however, on the ground level, we are seeing the Social Housing sector struggle due to increased build costs and many Registered Social Landlords are unable to proceed with development sites ready to go, due to financial viability and waiting for further financial assistance from the Government. There are also many property developers pulling back whilst they ride out the interest rate increase and keep an eye out for potentially better deals next year.
Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This may appear to be good news, but terminology is hiding the bad. Increases in ‘new work output’ is when builders finish brand new construction jobs. What this doesn’t show is the significant decline in new projects commencing due to a chasm of confidence in the economy. Most major builders' share prices are around half of what they were at the start of the year and that’s because they are finishing off their current projects and sitting on land as they know they won’t sell anything at the moment. This decline will continue, and start to filter through to this ONS data in a few more months. Don’t expect to see a rebound until the summer.
Copy

Premium
Edward Checkley
Managing Director at Advias
Property developments are often 12 to 36 months in duration and appraised at outset of the development. When looking at current construction output data we need to consider that these projects were agreed upon well before the current market conditions. Given the declining property market and increased borrowing costs, it is probable there will be a decline in new property development, resulting in a decline in construction output in the coming months and years.
Copy

Joe Garner
Founder & Managing Director at Joe Garner Consulting
Construction, real estate and property markets all suffer a lag from the impact of events. Spending on additional resources to maintain progress and meet the Help to Buy build deadline of 31st Jan is a lot less costly than missing the deadline and losing all help to buy sales, hence the output levels in October rising to £698 million. Q2 2023 onwards is most likely to see a major drop in construction output as planning applications and award numbers fall. New build construction accounts for 60% of construction output and 10% of the UK employment market and roughly 3 million jobs. Construction is the bedrock of the UK economy on which stability can be built. As a nation that is desperately short of housing, the remedy surely is to build our way out of a recession by building new build housing?