UK construction outlook

The latest data highlights a 0.6% fall in construction output between Q4 2023 and Q1 2024, mainly resulting from a decrease in new work, although repairs and maintenance work also softened. ONS also estimates that output fell 2.2% in the three months to April 2024, this is the sixth consecutive fall in three months. Most sub-sectors showed a softening in output in the quarter, though for possibly different reasons. BCIS data shows a slowdown in the residential construction pipeline. This can be attributed to combined factors – financial constraints, evolving building regulations, and reduced demand for new private homes. The knock-on effect impacts the affordable housing sector, which relies heavily on Section 106 contributions from private developers. The good news, however, is that new orders appear to have levelled off compared to significant quarter on quarter falls through 2023. The desire to attract workers back into city centres is driving a healthy pipeline of new commercial space. Generally, this is through refurbishment and fit-out of existing buildings, in line with current planning expectations, with pockets of landmark new build, notably in central London. We are also seeing growing demand for the upgrading of existing commercial properties in support of 2030 carbon reduction policies, as well as renewed activity in the hotel sector, especially in relation to upgrading existing assets.