Fernando de Querol Cumbrera
Research expert covering construction, loans, leasing, savings, and debt
Construction industry in the United Kingdom - statistics & facts
After several years of strong growth, the construction industry in the United Kingdom is showing the first signs of decline. The gross value added of construction activities in the UK decreased in the last quarter of 2023 and the first one of 2024. There are several challenges putting pressure on the construction sector, such as material costs continuing to rise, the labor shortage, and an overall uncertain economic environment.
Is the construction industry still growing?
After a strong post-COVID recovery in 2021, with a recorded percentage change of the construction output of 12.6 percent, by 2023, that growth rate had fallen to 2.1 percent. That indicates that the construction output was growing at a lower rate. Although those figures still showed a positive outlook, that contrasts with the number of new homes registrations, which fell very sharply in 2023, with every region in the UK recording lower registration figures than the previous year. Those results cast the homebuilding segment in a negative light. Similarly, the number of housing starts in England, which indicates the number of projects in which contractors will be working in the following months, also decreased significantly in the second half of 2023.Construction costs are still high
In addition to those indicators showing worrying trends in the residential segment of the industry, certain challenges affect the UK construction industry as a whole, such as rising construction costs. In 2022, the rising oil and energy prices affected materials whose production is energy-intensive, such as steel, and other material costs have also increased in line with inflation. Even if the price of most building materials did not continue to increase as quickly in 2023, the price of several products reached a growth rate of over 10 percent. That was the case for ready-mixed concrete, whose price was 16.4 percent higher than in the previous year. Nevertheless, the construction costs for the industry as a whole rose at a much slower pace in the past year. Overall, the outlook for the construction sector does not look particularly positive.
