Strong demand prompts housebuilders to begin new projects

Construction output growth hit a 24-year high in June but, despite cautious industry optimism and concerns remain about labour and material shortages driving high inflationary pressures, according to the latest monthly PMI data for June.

At 66.3 in June, up from 64.2 in May, the seasonally adjusted IHS Markit/CIPS UK Construction PMI Total Activity Index signalled the strongest rate of output growth since June 1997.

Housebuilding was the strongest sector, reaching 68.2 in June, the fastest pace of growth since November 2003.

There has been a rapid turnaround in demand for new construction work, especially residential building and commercial projects thanks to the reopening of the UK economy.

Tim Moore, economics director at IHS Markit, said: “June data signalled another rapid increase in UK construction output as housing, commercial and civil engineering activity all expanded at a brisk pace.

“The headline index signalled the fastest rise in business activity across the construction sector for 24 years. Total new orders expanded at one of the strongest rates since the summer of 2007, mostly reflecting robust demand for residential projects and a boost to commercial work from the reopening UK economy.”

Matthew Farrow, director of policy for the Association for Consultancy and Engineering, commented: “The figures reflect growing confidence in the UK economy and the construction industry which is, of course, welcome. However, it is clear that the severe shortage of products and materials, as well as issues around transportation, are now having an adverse effect on lead times and putting inflationary pressure on prices.


“There is no easy fix to this problem, other than medium to long-term changes in our approach – I would hope that this leads to smarter design through the use of alternative materials, which could also have the added benefit of creating less carbon intensive buildings and structures and accelerating our path to net zero.”

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, noted: “On a quarterly basis the direction of travel is firmly upwards – up 6.3% compared to the previous three months – and total output is still above its pre-pandemic level.

“Within the industry the star performers are infrastructure – now up a fifth on its pre-pandemic level – and private sector housebuilding, both of which continued to expand in May despite days lost to tropical downpours.”


Email the story to a friend


  1. northernlandlord

    The developers control the market to maximise profits. They bank land and drip feed supply to keep prices high.
     According to the Local Government Association which represents 327 of the 333 councils in England, 2.78m homes have been granted planning permission by councils since 2010-11, but over the same period only 1.6m have been built. (42% remain unbuilt).. The number of planning consents granted for new homes has more than doubled since 2010, with nine in 10 planning applications being approved by councils.
    Councils are no better, during the height of council building, in the 1950s, councils built on average around 147,000 homes a year. In the past 10 years councils have averaged building around 1,400 homes a year.
    According to Property Industry Eye New build homes have continued to command a price premium in every region of Britain and according to the Community Planning Alliance there isn’t a housing crisis, there’s an affordability crisis. Build, build, build won’t make houses affordable. Government policy is not even about making houses affordable. In fact it’s the opposite – policies like Help to Buy and Stamp Duty holidays are inflationary.

    1. jan - byers

      You know nothing at all about the new homes market

      There are a myriad of reason why builders hold land

      I am a developer

      In most instances builders want to get on and build as if they do not build they do not sell and have no money coming in

      It is called cash flow



You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.