Construction Market Overview: October 2024
A monthly round up of key Construction Market Data and Forecasts including statistics from industry commentators and influencers.
Cautious Optimism for Construction growth going into 2025 following the Autumn Budget
The Chancellor’s 2024 Autumn Budget brings key changes to the UK Construction Sector, with £100 billion earmarked for infrastructure and £5 billion for housing, primarily focusing on affordable homes, green retrofits, and major transport projects. While generally promising, the Budget’s success will depend on economic growth and overcoming key challenges within Construction. Read our latest blog to understand more about The Impacts of the Autumn Budget on the UK Construction Sector.
The ONS have published their construction output data for August 2024, showing that monthly construction output increased by 0.4%, following a 0.4% decline in July. This growth was mainly driven by a 1.6% increase in new work, offsetting a 1.0% decline in repair and maintenance. Private housing and commercial sectors were also notable contributors, with new work in these areas growing by 3.4% and 2.2%, respectively. In the three months to August, construction output grew by 1.0%, led by a 1.7% rise in new work, while repair and maintenance remained flat(0.0%).
In September, UK construction activity saw its fastest growth in nearly two-and-a-half years, as the S&P Global UK Construction PMI® rose to 57.2 from the 53.6 seen in August, driven by a strong rise in civil engineering and fuelled by demand for renewable energy infrastructure. Commercial and Residential sectors also saw notable growth, mainly due to supportive economic conditions and an increase in Client spending. New orders also increased, however cost pressures continued due to higher material and wage costs. And, despite a slight dip in optimism, firms remain positive about growth going forwards, particularly in house building.
The Construction Products Association have published their latest Autumn forecasts, which signal cautious optimism for UK construction going into 2025. Following a predicted decline for this year of 2.9%, construction output is forecast to rise by 2.5% in 2025 and 3.8% in 2026, as lower interest and mortgage rates gradually improve housing demand, and government planning reforms potentially ease supply issues. Alongside this, private housing rm&i is set to grow significantly as consumer confidence and real wages recover, driving interest in energy-efficient home improvements.
The DBT construction material price index for all work decreased 0.3% month-on-month in August 2024 and was 1.1% lower than a year earlier, marking the fifteenth consecutive annual decrease. Construction material prices for new housing increased 0.2%, with repair and maintenance also increasing 0.2% and other new work falling by 2.1% in the year to August 2024.
Housing market shows steady growth over the summer into early autumn and is expected to remain modest for the rest of 2024
The HMRC report that in September the number of property transactions in the UK totalled 91,820, just 0.9% higher than the 91,020 seen in August, and is 8.9% higher than a year earlier. This marks the first month-on-month increase for property transactions since May 2024. Alongside this, the Bank of England report that in September, the number of mortgages approved for house purchase was 65,647, which is 1.1% higher than August, making it the fourth consecutive month that mortgage approvals have risen.
Nationwide report that in September 2024, UK house prices increased by 0.7% compared to August, with annual growth rising to +3.2%, up from +2.4% in August, marking the fastest paced annual increase since November 2022. Despite this growth, house prices remain about 2% below their 2022 peak. And Halifax report that in September 2024, UK house prices rose by 0.3%, matching the 0.3% rise seen in August. Annual house price growth also increased to +4.7% in September, up from +4.3% the previous month, again marking the strongest annual rate since November 2022. Generally, market conditions have steadily improved over the summer and into early autumn, with housing price growth expected to remain modest through the remainder of the year and into 2025. Finally, data from the ONS and Land Registry shows that UK house price prices rose 1.5% in August when compared to July and that annual prices rose by 2.8%.
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