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The underlying value of UK residential construction starts was 31% lower for the three months to May compared to the same period in 2010 according to new data from construction industry analyst Glenigan. Private housing project starts were down 32% while social housing projects fell 28% for the reported period. “The shrinking pool of new social housing work is in stark contrast to the rapid government funded growth seen this time last year, and further retrenchment is expected through the year” said Allan Wilen, economics director, Glenigan.

“The 14% drop in gross mortgage lending reported by the Council of Mortgage Lenders report and the 1.2% fall in house prices recorded by the Halifax paint a glum picture for the housing market that underlines the difficult trading condition faced by housebuilders. The fall in private housing project starts highlights developers’ reluctance to open up new sites while conditions in the wider housing market remain weak, preferring to build out and secure sales on existing sites” continued Wilen.

The North East and South East of England suffered 76% and 42% declines respectively for private housing development starts. London avoided a decline in private housing project starts reflecting the strength of the wider housing market in the capital.

However, Wilen commented “Although house prices and mortgage approvals are expected to remain weak near term, Glenigan is forecasting a modest uplift in project starts during the second half of this year as developers open up new sites in anticipation of a brightening in market conditions during 2012.”

For construction as a whole, the value of projects starting on site in the three months to May was 21% lower than a year ago. The Glenigan Non-Residential Index for May is 21% down on a year ago; Government funding cuts have stemmed the flow of public sector projects while weak economic growth and uncertainty are curbing private sector investment. The underlying value of hotel & leisure starts halved during the three months to May, while office and industrial starts declined by 55% and 31% respectively. The only sectors to grow were retail, which was boosted by supermarket construction, and community & amenity.

The Civil Engineering Index for May was 1% down on a year ago following over six months of retrenchment. While the value of infrastructure construction has consistently fallen this year, the pace of decline in utilities building has slowed. Over the three months to May the underlying value of utilities construction increased by 17% on a year ago. By contrast, infrastructure project starts dropped by 16% over the same period.

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