By Daniel Hunter
The UK construction industry has seen a rise of nearly 1.9% in new building project starts in the three months to May, led by growth in the private housing sector, according to fresh figures from construction industry analysts Glenigan.
The value of private housing projects starting on site is up 15.2% compared with the same period in 2012, while both infrastructure and utilities projects continued the strong growth seen in April with year-on-year increases of over 30% in the value of new work starting on site.
The monthly Glenigan Index is based on extensive research of every construction project started in the UK over the previous three-month period and provides an indicator of developing activity in the industry.
The 1.9% increase in underlying project starts this month comes as the turnaround in civil engineering projects seen in April maintained momentum in May, with a UK-wide 31.3% year-on-year increase in infrastructure work starts and a 31.2% increase in utilities starts.
"The improvement in the weather seen during April and May has allowed projects placed on hold in the first quarter to get underway," Glenigan economist Andrew Whiffin commented. "The large amount of road refurbishment projects that started in the last month is testament to this."
Gains in private housing starts valued at under £100m were focused in London and the South East in the past month, but increased activity in Yorkshire and the South West in April also boosted the index. Starts on several private housing projects worth over £100m will give Minister of State for Housing Mark Prisk further cause for positivity.
"In addition to the strength of underlying private housing starts, we have also seen a number of larger housing developments start on site that are excluded from the index," Mr Whiffin said.
"In May alone there were several such schemes that started, the largest of which is valued at £180m — a development in Brentford that will be offering properties eligible for Help to Buy assistance in a sign that the Government scheme is helping to boost construction activity in the sector."
Mr Prisk, who has led the Government's Help to Buy and NewBuy schemes to aid aspiring homeowners, is due to attend a briefing with Glenigan representatives today to discuss the latest figures and industry developments.
Despite the strength in certain construction areas, many sectors saw declines in the value of new projects beginning, which kept overall year-on-year growth for the quarter to May at just 1.9%.
Industrial and retail starts have suffered in 2013 and little deviation from this trend is yet apparent. New projects in these sectors were down by 36.4% and 9.5% respectively compared to the figures for May 2012.
Both areas experienced relative booms last year and now appear to be in a period of consolidation, the Glenigan Index suggests.
"Industrial starts this year have fallen as a result of fewer warehousing and distribution projects starting on site compared to 2012," Mr Whiffin explained.
"The sector has become increasingly tied to the prospects of consumers who have a growing preference for home delivery and collection, which saw demand for these types of industrial properties boosted last year. This reflects a shift in consumer preferences rather than a period of sustained growth for the sector."
While starts on hotel construction ventures increased by 50.2%, there were year-on-year falls of 37.5% on healthcare projects and 10.7% for education projects.
The biggest increases in the value of activity started were seen in London (33.3%) and Northern Ireland (29.1%) but these were in contrast to falls of 28.4% in the South East and 26.4% in Scotland. Yorkshire and the Humber saw continued growth in construction starts, enjoying a 17.4% rise on last year's figures for May.
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