House Building Defies Overall Construction Decline

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House Building Defies Overall Construction Decline

The latest Office for National Statistics figures show that in November 2016, construction output fell by 0.2% compared with October 2016, largely due to a contraction in non-housing repair and maintenance.

The underlying pattern as suggested by the 3 month on 3 month movement shows a slight contraction of 0.1%. This follows a 0.6% fall in October and a 0.8% contraction recorded in the third quarter of 2016.

Repair and maintenance provides the largest downwards pressure to construction output, falling both on the month and year.

New work in November 2016 increased, with new housing output continuing to grow.

Rebecca Larkin, Senior Economist at the Construction Products Association, commented:  “Overall weakness in official construction output data looks to have persisted in the final three months of 2016, which stands in contrast to other industry surveys.

“One common theme reported in recent months, however, is the outperformance of private housing relative to other sectors such as commercial, industrial and repair and maintenance. In November, private housing output rose 0.5% to reach the highest level since 2010 and compared to a year earlier, output increased 12.5%. Activity has no doubt been sustained by government support measures such as Help to Buy, strong growth in house prices and the availability of low-interest mortgages.

“Economic and political uncertainty is expected to intensify this year and combined with rising inflation denting confidence, means we are unlikely to see similar growth rates in private housing in 2017. Public housing, on the other hand, increased 5.6% in November and whilst monthly data can be volatile, this could signal a pickup in public sector house building after activity has been disrupted by two years of changes to funding programmes.”

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