Improved market condition as referendum nerves steady

• Starts in the three months to November were 7% lower than a year but 4% up on the previous three month.
• Non-residential project starts were 10% down on a year ago but 10% ahead of the three months to August 2016. Office and industrial project starts were especially weak against a year ago, being 29% and 13% down respectively on a year earlier, but were ahead of the previous three months.
• Civil engineering projects also dampened overall starts, being 14% down on a year ago.
• Residential starts were relatively stable; being 2% down on both the preceding three months and against a year ago.

The value of work starting on site* in the three months to November was 7% down on the same period of a year ago, according to the latest Glenigan Index. 

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “The latest Glenigan Index data suggests that market conditions and investor confidence have begun to stabilise following the initial turmoil surrounding the EU referendum vote. Whilst the value of underlying project starts is still 7% down on a year ago, they are ahead of levels seen during the three months to August. The steadying in industrial and office project starts is especially encouraging: both sectors saw project starts fall sharply as investors reviewed the implications of the Brexit vote for their projects’ viability. The partially recovery in starts suggests that investor confidence is returning.

Private residential starts were 8% up on a year ago and were slightly ahead (1% higher) than during the preceding three months. Furthermore the development pipeline continues to strengthen, with the private residential approvals during the three months to November 18% up on a year ago. In contrast social housing starts were 23% down on a year. A further weakening in project starts is anticipated near term, although a sharp rise in planning approvals during November and signs in the Autumn Statement of a shift in government policy are encouraging.

The Glenigan Index data suggests that a regional shift in the industry’s workload is underway. Most parts of the southern and eastern England have seen a weakening in project starts. The capital saw the sharpest decline, with project starts during the three months to November, being 31% down on a year ago. In contrast the north west of England, west midlands, Scotland, Wales and Northern Ireland have all experienced a strengthening in project starts, growing by 13%, 10%, 9%, 8% & 72% respectively.