The newest ONS figures for development output in July 2022 confirmed a second consecutive lower in month-to-month development output, following seven consecutive months of progress within the sector between November 2021 and Might 2022
Building output in July 2022 decreased throughout quantity, restore and upkeep with a slight 0.3% improve in new work.
The figures present a lower in output, however to not the extent seen in 2020
Following the 1.4% lower in June 2022, month-to-month development output decreased 0.8% in quantity phrases in July 2022; that is the second consecutive lower in month-to-month development output after seven consecutive months of progress.
The lower in month-to-month development output in July 2022 got here solely from a lower in restore and upkeep (2.6%) as new work noticed a slight improve (0.3%) on the month.
On the sector degree, the principle contributors to the lower seen in July 2022 had been public housing new work, and private and non-private housing restore and upkeep, which decreased 13.1%, 8.0% and a pair of.6%, respectively.
The extent of development output in July 2022 was 2.1% (£300 million) above the February 2020 pre-coronavirus (COVID-19) pandemic degree; new work was beneath at 1.9% (£181 million) its February 2020 degree, whereas restore and upkeep work was 9.7% (£481 million) above the February 2020 degree.
Regardless of the month-to-month lower, development output elevated 1.4% within the three months to July 2022; this got here solely from a rise seen in new work (2.7%) as restore and upkeep noticed a slight lower (0.7%), and that is the ninth consecutive interval of progress within the three-month-on-three-month sequence, however the slowest price of progress for the reason that three months to December 2021 (1.0%).
Provide chain points and the cost-of-living disaster had an affect on development output in July 2022
As in earlier months, elevated prices of merchandise, most notably concrete, plaster, bricks, sand, gravel and asphalt-related merchandise, are talked about. There have additionally been continued mentions of upper gasoline and power prices, and VAT tax will increase for purple diesel, which have had an affect once more this month.
Suggestions indicated that output was affected by the lack of working days throughout file excessive temperatures over the summer time and that fewer folks had been in search of restore and upkeep work attributable to the price of dwelling disaster.
Clive Docwra, managing director of property and development consultancy McBains, mentioned:
“Provide bottlenecks are additionally persevering with to affect, particularly with supplies coming from China being affected by the partial or full lockdowns in dozens of Chinese language cities.
“The impact of Russia’s invasion of Ukraine can also be beginning to chew tougher. Many development companies had been protected against the will increase in power and materials costs as a result of they used ahead contracts for power and to pre-purchase supplies and merchandise the place potential, however that has merely delayed pressures that at the moment are being felt extra intensely.
After a summer time of political turbulence, the Authorities must make daring strikes in boosting power environment friendly applied sciences throughout the sector
Clive continues: “July’s lower in output partly displays falling demand due to rising price of dwelling pressures, and uncertainty over the UK financial coverage given the competition over who would develop into the following Prime Minister.
“It has meant many consumers – from households contemplating low-scale residence enhancements to buyers and builders considering main new tasks – held off committing funding.
“To ease the power disaster, the development sector would have preferred to see the Truss administration assist a significant residence insulation programme, which might not solely assist repair Britain’s leaky and energy-inefficient properties and assist reduce payments, but in addition present work for smaller development companies who’re specifically feeling the pinch at current.”
Dave Sheridan, govt chairman of TDR Capital-backed modular housebuilding pioneer, ilke Houses, mentioned:
“The newest ONS Building Output figures present simply how a lot the present price of dwelling disaster is biting down on folks’s livelihoods. As supplies, labour and power have develop into a lot dearer attributable to lack of provide, the output of retrofit jobs has decreased throughout the board. Individuals wish to enhance the power effectivity of their properties forward of a troublesome winter, however cash is scarce and Authorities stimulus is not there.
“Provide-side intervention in revolutionary housebuilding strategies is required. At present even personal housebuilders are struggling to construct quick sufficient to satisfy demand and the normal housebuilding sector is struggling to generate progress. New revolutionary strategies of personal housebuilding have to be sought.
“With its extremely deliverable, precision-engineered fashions and an trade shift in the direction of low carbon manufacturing and operation, MMC suppliers are greatest positioned to climate the oncoming storm. Nonetheless, the Authorities isn’t committing to the supply-side push the broader trade wants.
Regardless of final week’s Authorities intervention on power payments, because the hovering price of power and restricted supplies provide come to dominate the dialog round home constructing, the necessity for extra sustainable, power environment friendly modular housing has by no means been larger.
“Will probably be delivering these sustainable housing choices at tempo, which is able to maintain the keys to unlocking progress throughout the wider sector at a time when the financial system, and the UK’s housing provide, desperately want a shot within the arm.”