Glenigan Index: 'lack of government-funded investment slowing recovery'
Published by Max Salsbury for 24dash.com in Housing and also in Development
Glenigan Index: 'lack of government-funded investment stifling recovery'
The Glenigan Index for the three months to July shows an increase in private construction work but a fall in social housing builds.
Private housebuilding project starts increased by 36%, whilst social housing starts fell 22%.
Allan Wilen, economics director, Glenigan, said: "Looking ahead, the flow of private sector work is forecast to improve further over the remainder of the year and during 2013, while a scarcity of government funded investment will continue to restrict the pace of recovery".
On residential construction Mr Wilen commented: "The underlying value of private housing starts has increased by 36% over the three months to July, as housebuilders have brought forward sites in anticipation of a strengthening in housing market activity over the coming months.
"In contrast the index of social housing starts has fallen by 22% in July, after a temporary increase during the first quarter of 2012. Reduced government investment means that we expect this negative trend to continue."
Non-residential project starts are down 3% year on year as weak education and community & amenity projects outweigh growth in office and industrial construction.
Civil engineering is down 13% year on year as infrastructure and utilities projects slow.
Mr Wilen continued: "The cuts in government spending will continue to restrict the number of education and social housing projects coming through the development pipeline. Though the level of health projects has remained resilient so far, we expect a shrinking flow of work over the next eighteen months.
"Less money for new builds could see an increase in refurbishment work next year, with schemes such as the Priority Schools programme promising to provide funds for such work.
"There will continue to be a high level of infrastructure investment, particularly concentrated in the south of England. Crossrail will continue to provide rail related work, while there may begin to be a lift in spending on the road network.
"More growth is predicted for the commercial sectors, though the strength of any sustained recovery depends on economic prospects, both in the UK and abroad. The increase in private housing building seen during the year to date will slow over the remainder of the year. Whilst we expect 2012 to be a growth year, poor household earnings growth and weak house prices will dampen the pace of recovery in the value of starts."