Project starts and planning approvals plummet since March

The figures, published in the July 2023 construction review by industry analysts Glenigan today (18 July), shows a worrying and significant slump in the projects pipeline.

Glenigan’s data reveals ‘plummeting’ project start numbers – a 26 per cent fall in the three months to the end of June, compared with the previous three months. That figure is also 42 per cent lower than last year.

Meanwhile, the number of projects being approved at the detailed planning stage saw a 29 per cent decline over the same three-month period (though just 1 per cent down on 2022 levels).

And main contract awards fell 32 per cent in the three months to the end of June, putting them 30 per cent lower than the same time in 2022.

Although Glenigan found residential construction experienced a ‘slight upturn’ during the three months to June as starts increased 10 per cent (seasonally adjusted), this remained 40 per cent lower than last year’s figures overall.  

Despite the small silver lining, the figures paint a picture of general decline amid inflating construction costs and wider economic uncertainty, which Glenigan warns is unlikely to recover before the end of the year. 

Glenigan’s Economic director, Allan Wilen, expected the next six months to be ‘turbulent’, with ‘upcoming interest rate hikes further hindering projects moving to site’. He added that work was already ‘falling back in the civil engineering sector, with marked declines in both infrastructure and utilities’.

He said: ‘While there are small signs of recovery in the long term, with positive private housing starts an example of stabilising conditions in some verticals, consumer and investor confidence still remains low, generally stifling activity in the here and now.’

Data from the British Property Federation and Savills, also published today, found construction starts on build-to-rent homes (totalling 5,549 units) was down 55 per cent in the first half of this year compared with 2022.

The outlook was particularly gloomy in London, where construction starts amounted to just 836 units, down 80 per cent year-on-year (from 4,415 in the first half of 2022).

Major firms are already feeling the impact of the downturn. Earlier this month Allford Hall Monaghan Morris (AHMM) confirmed it was making a raft of redundancies after a number of its projects were ‘put on hold unexpectedly’ or hit by delays.

The AJ100 practice is thought to be cutting its 478-strong workforce by around 40 people, which it put down to project turbulence caused by ‘current economic circumstances’.