NOT SO ‘HAPPY NEW YEAR’ FOR CONSTRUCTION INDUSTRY

The New Year blues started early for the construction industry – with many builders ending 2017 with a whimper rather than a bang. The loss of momentum in commercial property and infrastructure work dragged down both output and sentiment in the latter part of the year.

But Britain’s housebuilders continue to buck the trend, posting a sixteenth straight rise in monthly output and injecting a defiant note into an industry which has been hit hard by rising material costs and had its confidence eroded by months of false dawns in Brexit negotiations. For all that - there are some bright spots. Construction firms’ order books are far from empty, and on the front line we’re seeing consistent appetite among developers to convert office buildings into residential units under the extended and popular Permitted Development Rights.

It’s too early for the Chancellor’s housebuilding stimulus measures to have filtered through in a significant way, but consistent demand, both from developers and would-be homeowners, is ensuring the residential sector is continuing to function as it should. The picture seems far less clear on the commercial property front - with demand being squeezed as larger companies activate Brexit contingency plans and smaller firms mothball plans to scale up their premises. Few industries are more susceptible to shifts in investor confidence than construction, and if the coming months fail to deliver greater clarity on what the real impact of Brexit might be, we can likely expect the commercial sector to continue its stuttering progress.