Construction Market Overview: July 2024
A monthly round up of key Construction Market Data and Forecasts including statistics from industry commentators and influencers.
UK Construction shows mixed trends amidst stable growth going into the summer
The ONS have published their construction output data for May 2024, showing that in May, monthly construction output grew by 1.9%, rebounding from a revised decline of 1.1% in April. This growth was driven by a 2.7% increase in new work and a 0.8% rise in repair and maintenance, with warmer weather contributing to the higher output. Overall, eight of the nine construction sectors saw growth, notably a 2.8% increase in total new housing, a 3.5% rise in infrastructure new work, and 2.1% growth in non-housing repair and maintenance. Despite this monthly increase, construction output fell by 0.7% over the three months to May, with declines in both new work (0.9%) and repair and maintenance (0.3%).
UK construction saw sustained growth in June 2024, as the S&P Global UK Construction PMI marked the fourth consecutive month of expansion. The index fell to 52.2 in June from 54.7 in May, indicating a softer growth rate, with commercial activity remaining the main growth driver, though its expansion slowed from a two-year high in May. However, housing activity declined following a brief rebound in May. And growth in new orders was the slowest since February, partly due to election-related uncertainties. Despite this, construction firms hired additional staff at the fastest rate in ten months. Inflationary pressures were muted, encouraging firms to expand purchasing activities, with vendor delivery times improving for the sixteenth consecutive month. Alongside this, confidence in the 12-month outlook remained strong, bolstered by expectations of future interest rate cuts.
The DBT construction material price index for all work increased 0.8% month-on-month in May 2024 but was 2.0% lower than a year earlier, marking the twelfth consecutive annual decrease. Construction material prices for new housing decreased 0.1%, with repair and maintenance and other new work falling by 0.5% and 3.5%, respectively in the year to May 2024.
UK Housing market remains subdued, but showing signs of stability
The HMRC report that in May the number of property transactions in the UK totalled 91,290, 2.4% higher than the 90,430 seen in April, and is 17.2% higher than a year earlier. Property transactions in May 2024 were also 6.0% lower than pre-pandemic levels in January 2020. Alongside this, the Bank of England report that in May, the number of mortgages approved for house purchase was 59,991, which is 1.4% lower than April, but 19.2% higher than a year ago and 13.6% lower than January 2020.
Nationwide report that In June 2024, UK house prices grew by 0.2% compared to May, with the annual growth rate increasing to +1.5% from the +1.3% seen in May. Despite stronger earnings growth, higher mortgage rates are straining affordability, and the housing market remains subdued, with transactions around 15% lower than 2019 levels reflecting the impacts of increased borrowing costs. And Halifax report that UK house prices remained stable in June 2024 decreasing by just 0.2% compared to May, with annual house price growth increasing to +1.6% from the +1.5% seen in May. Despite a subdued market, stability persists mainly due to a shortage of available properties rather than buyer demand. Finally, data from the ONS and Land Registry shows that UK house price prices rose 1.2% in May when compared to April and that annual prices rose by 2.2%.
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