Drawing insights from the latest Glenigan Construction Review—a trusted industry resource that tracks trends and developments in the UK construction sector—this article explores the current state and future of the UK housing market. Glenigan’s data, reflecting industry activity up to September 2024, reveals a sector grappling with challenges, yet showing signs of stability and potential growth. For our certified ATTMA members, these insights highlight areas of opportunity and provide a clearer picture of what lies ahead in residential development.
Current Market Overview
Despite a 17% decline in residential project starts in the three months leading to September, which represents a 24% drop from the same period last year, the market is showing resilience. Major residential projects valued at over £100 million have been particularly impacted, falling by 57% since the last quarter and a steep 61% year-on-year. This decline underscores ongoing challenges, including economic uncertainty and changes in investor confidence. However, Glenigan’s data points to certain upward trends and emerging segments that could signal a turning point in the market, driven by recent government policies and sector-specific funding .
Positive Developments
One promising development is the 6% rise in residential main contract awards compared to the prior three months. This figure, representing £14.23 billion, marks a notable 30% increase year-on-year and indicates heightened optimism among developers and investors. Such contract awards typically signal longer-term confidence, as they reflect commitments that are planned well in advance of breaking ground. Additionally, Glenigan reports a modest 2% increase in detailed planning approvals year-on-year, suggesting a healthy pipeline of projects awaiting favourable market conditions .
Diverse Housing Project Trends
The UK housing sector includes various types of residential projects, each reflecting different trends. According to Glenigan, private housing dominated the sector by accounting for 57% of total project starts in the quarter, despite a 22% drop in value from the previous year. This segment, worth £5.99 billion, continues to anchor the market. Conversely, private apartment projects experienced a sharp 46% drop year-on-year to £1.37 billion, capturing just 13% of new starts. Glenigan attributes this decrease largely to inflationary pressures and supply chain challenges that have disproportionately affected high-density developments .
The report also highlights a substantial increase in social sector housing, which rose by 45% from 2023, reaching a value of £1.76 billion. This 17% share of the market showcases strong government-backed activity aimed at addressing the affordable housing shortage. Although starts for social sector apartments fell by 57%, this shift towards social sector housing could be indicative of broader policy support to increase access to affordable homes, which may spur greater stability and growth in the coming years.
Regional Variations in Project Activity
Regionally, the Glenigan report paints a mixed picture. In London, residential project starts fell by a significant 51%, reflecting both economic pressures and planning constraints. In contrast, the East of England saw an 8% rise, buoyed by projects like the Top Farm Development in Berkshire. The North West also exhibited a strong pipeline with planning approvals jumping 58%, backed by major initiatives such as the £570 million Crown Street Phase 3 project in Manchester. Such regional insights indicate that while some areas are witnessing slowdowns, others remain robust, with promising pipelines that could lead the market’s overall recovery.
Economic Outlook and Housing Market Growth
According to Glenigan’s economic forecast, growth in the UK’s economy is expected to gradually increase, with annual expansion projected to reach around 2% by 2025 and 2026. This improvement is anticipated to coincide with a gradual rise in housing project starts, which are forecasted to recover in the latter half of 2024. The acceleration of growth through 2025 is likely to support the broader construction industry, particularly as investor confidence strengthens. Glenigan’s report suggests that this economic upturn, alongside potential fiscal incentives, could further bolster the housing sector’s expansion.
Conclusion
In sum, while the UK housing market currently faces its share of challenges, recent data from Glenigan suggests that it is on a trajectory towards recovery. The increase in main contract awards and the presence of a healthy project pipeline indicate that the market is gradually stabilising. Additionally, the rise in social sector housing aligns with efforts to make housing more accessible, which could have a lasting positive impact on the overall housing landscape. Although certain segments, like private apartments, are feeling the pressure, the diversified nature of the housing market—spanning private and social sector projects—provides a balanced foundation for future growth. As the economic environment improves, the housing sector is well-positioned to leverage these positive developments, making it an area worth watching closely in the years to come.
