Construction output saw a decrease of 0.6% in the three months to November 2023; according to findings from the Office for National Statistics’ (ONS) latest Construction Output report.
The report found that this decrease came solely from a decrease in new work (3.6% fall), as repair and maintenance increased by 3.8%.
Monthly construction output decreased 0.2% in volume terms in November, following an upwardly revised decrease of 0.4% in October 2023, with the monthly value in level terms in November 2023 at £15,571m.
The decrease in monthly output came from a decrease in new work (2.0% fall), as repair and maintenance increased by 2.1%.
Three out of the nine sectors saw a fall throughout the month, with the main contributors to the monthly decrease seen in private new housing and infrastructure new work, which decreased by 3.9% and 2.0%, respectively.
Anecdotal evidence suggested that the effects of adverse weather, including heavy rainfall and strong winds in November, led to delays in planned work.
Terry Woodley, MD of development finance at Shawbrook, said: “Construction output lagged in November, with both house building and commercial construction struggling to build momentum following sustained high interest rates and rising costs.
“Though December’s figures may be similar, 2024 holds a more positive outlook with interest rates expected to either hold or fall which is encouraging more confidence in the sector.
“Developers should continue to be resilient and use this as an opportunity to consider where they can make changes to their business strategy to ensure it’s robust against persistent challenges.
“For example, our research revealed that developers are making changes such as looking to build in different locations (47%), changing building materials (40%) and planning to build different types of properties (39%).
“Similarly, working with a specialist development finance lender can offer a more tailored funding solution, which can help guide developers’ next steps as we enter 2024.”
Michael Wynne, co-founder of the housebuilder Q New Homes, added: “Housebuilders faced a perfect storm of weak demand and surging input costs during much of 2023, and in November private sector house building contracted by a further 3.9%, more than any other construction subsector.
“But despite the cold conditions on building sites this week, there’s a growing sense that the industry’s dark clouds are finally, slowly, starting to part.
“The new year began with a flurry of interest rate cuts from high street lenders, and the prospect of more affordable mortgages should help buyer demand recover in 2024.
“In fact, there are signs that this has already begun, with Persimmon, one of the industry’s biggest beasts, reporting a modest uptick in house sales at the end of 2023.
“But with most developers planning 18 months to two years ahead, we’ll need to see a sustained increase in buyer demand before we can declare the worst to be past.
“Meanwhile on the supply side, challenges remain. Skilled tradespeople remain in short supply in many areas, with lead contractors and developers having to work hard to find and retain the people they need. As a result margins are likely to stay squeezed for the foreseeable future.
“Nevertheless, there have been some positive movements on building materials. Softer demand has reduced average delivery times and even the costs of several key materials, so on balance the sector is beginning 2024 in a better place than the ONS’s November 2023 data might suggest.
“Looking ahead, 2024 is likely to see intense competition as housebuilders fight for market share as both demand and supply become more free-flowing.
“To succeed, developers will need to identify not just the right areas, but also the right design features, to win sales in the recovering new-build market.
“With many buyers focusing not just on upfront cost but also the ongoing cost of ownership, energy-efficient homes are likely to be in high demand, as will designs that use modern, sustainable methods of construction to reduce carbon while maximising quality and comfort.”
