New orders for private housebuilding down nearly a fifth, says ONS
Private housebuilding output in the first quarter of the year dropped by 5.3% according to the latest official figures, dragging down the modest rises in output seen elsewhere in construction.
The latest figures published this morning by the Office of National Statistics (ONS) show that £9.74bn of private housebuilding work was carried out in the first three months of the year, a sharp drop on the last quarter of 2022, albeit marginally – 0.4% - ahead of the same period last year.
The figures also showed that private housing output dropped in the latest month, March by a further 1.4%, with new orders figures making for even grimmer reading for housebuilders.
The ONS data showed that new orders for housing fell by 18.5% in the quarter, with the drop even more pronounced among public sector provider, with orders down by almost 20%.
The figures come after a raft of industry data indicating sharply declining output in the housebuilding sector, despite a more positive sales market than had been predicted in the autumn. Last week the latest monthly survey by the Chartered Institute of Purchasing and Supply found that housebuilding activity was contracting at the fastest rate experienced since the 2020 lockdown.
Those figures came a day after the NHBC published housebuilding data which indicated that private sector starts on site had halved in the first three months of the year, compared to the boom quarter at the start of 2023.
Despite the contraction in the housing sector, construction output overall grew a modest 0.2% in March, with an increase in new work largely offset by a decline repair and maintenance
The latest figures from the ONS show a total of four out of nine sectors experienced growth, with infrastructure new work (0.33%) and other public new work (0.31%) the main drivers.
Output in the first quarter (January to March) was 0.7% up on Q4 of 2022, stemming solely from a rise in repair and maintenance.
Industry figures have responded positively to the release, with Fraser Johns, finance director at contractor Beard saying it showed the “tide beginning to turn” after a difficult 2022.
“As we’ve headed further into the year, there’s no question the outlook has improved, helping to alleviate some of the bottlenecks and cost pressures found on site and encourage greater confidence among clients and firms,” he said.
“It’s positive to see more clients committing to new projects once again and the likes of infrastructure new work and public other new work continuing to be key drivers.”
The ONS’ monthly survey for construction and allied trades revealed anecdotal evidence of easing inflation and material costs, though customers are still reportedly hesitating to commission work due to fears about the economy.
Clive Docwra, managing director of consultant McBains, said the month’s growth was “a measure of good news for the construction industry”, particularly considering the impact of the wettest March for more than 40 years.
However, he said the picture in the housebuilding market was “not surprising.”
“Although reports elsewhere show house prices are rising which would normally trigger an increase in construction activity, most developers are still planning to reduce by about a quarter the number of homes they planned, and further land purchase is also on hold until the economic forecast becomes clearer,” he added.
Public housing (-0.17%) and non-housing (-0.36%) repair and maintenance also dropped, though private housing repair and maintenance was up 0.27%.
Total new orders in construction declined 12.4% in the first quarter, compared with Q4 2022, which was mainly due to a fall in private commercial (-22.3%) and private housing (-18.4%) new orders.
Meanwhile, in a trading update for the first quarter Balfour Beatty said that trading was in line with expectations. Its order book at the end of March was £17bn, a fall of £400m from the end of December. Its average monthly net cash was £740m for the first three months of this year, compared to £804m for 2022.
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