Monthly construction output in December 2020 was down 2.9% from November 2020 to £ 13,516 million. This was the first monthly growth slowdown since the record 40.7% decline in April 2020 and brought construction output to its lowest level since August 2020 when it was £ 13,181 million.
In December 2020, construction output fell by 2.9% month-on-month in all work series, as both new buildings (3.8%) and repair and maintenance work (1.5%) fell. This is the first drop in monthly growth since April 2020, when it fell by a record 40.7%.
After this monthly decline (2.9%) and upward revisions to monthly growth in February 2020, production levels in December 2020 are 3.5% below pre-coronavirus levels in February 2020.
Quarterly construction production increased 4.6% in the fourth quarter (October to December) 2020 compared to the third quarter (July to September) 2020; This was due to quarterly growth in both new work (4.0%) and repairs and maintenance (5.5%).
The increase in new work (4.0%) in Q4 2020 was due to quarterly growth in all new work areas, with the exception of private trade, which decreased 1.6%. Private new builds are the only sector that has recovered from February 2020 levels at some point, but fell back below that level in December 2020.
All work decreased by 12.5% in 2020 compared to 2019; This was the biggest drop in annual growth since 2009, when production fell 13.2%.
Orders were down 8.8% (£ 962 million) in Q4 2020 from Q3 2020, after a record 71.8% growth in Q3 2020.
Andy Sommerville, Director of Search Acumen, said: “These latest figures show that the construction industry is one of the most resilient sectors of the UK economy.
“The increase in private housing production in the last quarter is partly due to the fact that home builders have responded to the increased demand in the market. Strong buyer interest was fueled by the Stamp Duty Vacation and the desire of some to upgrade their properties by working and spending more time at home.
“However, the real estate market is facing strong headwinds. The recent drop in new build prices is partly due to concerns about whether these properties could consist of unsuitable facing materials. Existing new home owners are struggling to sell them due to growing reluctance on the part of lenders to borrow money to potential buyers, fearing that these properties will meet safety standards.
“A lack of confidence in the standard of these properties could affect the rest of the property market. New home owners may not be able to move into their next home if they cannot sell their existing home. Given that a large proportion of new home owners tend to move into homes, the demand for larger properties could shrink and potentially trigger a drop in property prices.
“This situation underscores the need for larger investments in the digitization of important real estate information in order to strengthen trust in the real estate market. By improving lenders’ access to more real estate information and encouraging higher data usage by transport companies and home builders, they can identify risks faster and advise customers better. We developed Data Snapshot to meet this need and to push the industry to change behaviors similarly and embrace digital working methods once and for all. This should give the parties involved in the transaction process more confidence that real estate information is robust and reflects its adherence to industry standards. “
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