Construction start-ups dipped seven per cent year-on-year and by more than a fifth when compared with the first quarter of 2016 in the three months straddling the EU referendum vote, new figures reveal.
According to the latest Glenigan Index, project starts slipped 21 per cent in the second quarter of the year with the statistics reflecting “the impact of the related political and economic uncertainty on investor nerves”.
There was, however, better news for residential starts which, despite being 15 per cent down on the preceding three months, rose by three per cent in August.
Non-residential project starts were 13 per cent down on a year ago and 24 per cent lower than March to May, while office project starts were half the level seen in the preceding three months and 43 per cent down on a year ago.
Public sector non-residential areas were also down on the same three months a year ago, while civil engineering projects starts dampened overall starts, down 34 per cent on a year ago.
Regionally the value of project starts were generally down on a year ago. However the South East and South West of England and Wales bucked the trend, with underlying starts up against a year ago. Starts were also sharply higher in Northern Ireland.
Allan Wilén, Glenigan’s economics director, said: “The seven per cent decline in project starts reflects in part the impact of the related political and economic uncertainty on investor nerves.
“Non-residential project starts were particularly weak, due to fewer office, hotel & leisure and industrial projects commencing on site. This, combined with a fall in civil engineering project contributed to the overall decline in the index against both the preceding three months and a year ago.
“Residential project starts were three per cent ahead of a year ago, despite a 15 per cent decline against three months to May. Private residential starts were unchanged on a year ago, while social housing starts were 10 per cent higher.
“In contrast to the recent slowing in project starts, the potential development pipeline remains firm. The value of projects securing detailed planning approval during the first eight months of 2016 is three per cent up on a year ago.
“However the strongest growth in approvals has been in those sectors where project starts have been most affected by referendum uncertainty; private housing, industrial and commercial developments. Investors will be closely watching the unfolding economic environment over the coming months to assess any implications for planned projects.
“This is likely to disrupt the progress of some projects to work on site and accordingly we expect an overall weakening in project starts during the second half of 2016.