Private housing delivery driving construction recovery

Market analysis by Alliance Fund, the end to end real estate fund, has found that total construction output has almost returned to pre-pandemic levels, but the recovery of the sector is being slowed by the delivery of public new housing, with the level of private new housing construction already bouncing back to exceed the pre-pandemic peak.

Alliance Fund analysed the latest data from the Office for National Statistics on construction output across Great Britain to estimate just where the sector will stand come the end of the year and how it has performed over the last year and since the start of the pandemic.

Based on the latest data, Alliance Fund estimates that come the end of the year, the total volume of construction output across Britain will hit almost £46.2bn. This would mean an improvement of 8.9 per cent on 2021, and an almost full return to the pre-pandemic peak of £46.3bn seen in 2019 (-0.2 per cent).

However, the story of Britain’s construction output differs drastically when splitting sector performance between that of private and public enterprise. Alliance Fund estimates that the volume of private new homes is set to climb by 3.9 per cent in 2022, hitting a total value of £40.8m. This would also see the private sector surpass the pre-pandemic total of £39.25bn seen in 2019 by 3.9 per cent.

In contrast, while the level of public new housing is forecast to increase by 6.2% on an annual basis, the sector is still some way away from recovering from the pandemic, with output sitting -23.6 per cent below the level seen in 2019.

CEO of Alliance Fund, Iain Crawford, commented: “While the residential property market has been booming pretty much since the start of the pandemic, it has proved a far more problematic period for the construction sector and we’re only now seeing total output return to pre-pandemic levels.

“This recovery has been very much driven by private enterprise and this is to be expected as the private sector is responsible for the vast majority of new homes delivered on an annual basis. Of course, the delivery of public housing is still a vital cog in the machine but public housing construction output continues to sit well below pre-pandemic levels.

“This is largely due to financial constraints, but it’s also fair to say that the rigid framework of the public sector has also prevented it from pivoting to the same extent as the private sector with respect to overcoming the problems posed by the pandemic and the solutions needed.”

By Mark Adair – Correspondent, Bdaily

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