Construction Market Overview: January 2024
A monthly round up of key Construction Market Data and Forecasts including statistics from industry commentators and influencers.
Construction activity continues to decline at the end of 2023, but falling interest rate could lift optimism for 2024
The ONS have published their construction output data for November 2023, showing that monthly construction output decreased by 0.2% in volume terms, solely due to a decrease in new work of 2.0% for the month, as repair and maintenance increased by 2.1%. Alongside the monthly figure, construction output decreased by 0.6% in the three months to November, as three out of nine construction sectors saw a fall in November, driven by decreases in both private new housing and infrastructure.
In complimenting this, December data from S&P Global/CIPS UK Construction PMI shows that construction activity continued to decline at the end of 2023. The Index increased slightly to 46.8 from the 45.5 seen in November, signalling the slowest rate decline in activity since September, and marking the highest monthly reading in four months. Housebuilding activity continued to be the weakest area of construction activity in December, despite its rate of decline easing to the slowest seen since July 2023.
However, Glenigan report that due to the recent fall in inflation in the year to November, optimism going into 2024 could be lifted as lower interest rates will bring a much needed boost to building activity across the private sector. This reinforces the trends in their latest construction industry forecasts 2024-25 that predicts 8% growth in underlying project starts in 2024 and further growth of 7% in 2025.
The DBT construction material price index for all work decreased 0.4% month-on-month in November and was 2.3% lower than a year earlier, marking the sixth consecutive annual decrease. Construction material prices for new housing decreased 0.8%, with repair and maintenance and other new work falling by 0.7% and 0.3%, respectively in the year to November 2023.
Housing market remains subdued as 2023 ends and we enter 2024
The HMRC report that in November the number of property transactions in the UK totalled 80,780, 1.2% lower than October, and 21.5% lower than compared to a year earlier. Property transactions in November 2023 were also 16.4% lower than in January 2020 (pre pandemic). And the Bank of England report that in November the number of mortgages approved for house purchase was 50,067, increasing 4.6% from the 47,900 seen in October, and is 9.9%% higher than a year earlier, which was during the post-mini budget spike in mortgage rates and slump in approvals.
Nationwide report that annual house price growth decreased slightly for December as it fell to -1.8% from the -2.0% seen in November, making them 4.5% below the all-time recorded high recorded in late summer 2022. And Halifax report that annual house price growth grew to +1.7%, from the -0.8% seen in November, marking the first positive annual growth since April. On a monthly basis, Nationwide report that house prices were flat (0.0%) in December when compared to the 0.2% growth seen in November. Halifax report that monthly house prices increased 1.1% in December, making it the third monthly rise in a row. Finally, data from the ONS and Land Registry shows that UK house prices decreased 1.2% in the twelve months to October 2023, compared to the revised estimate of 0.6% seen in the year to September 2023.
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