Covid-19 has had a significant impact on UK construction activity. Although completions have recovered well, the number of new sites starting construction across the country remain low after falling sharply in April, which could limit medium-term housing supply.
The national picture
In April, UK construction activity fell considerably. Since then, the number of open sites and on-site productivity has improved greatly. However activity is not yet back to normal.
The latest data from Glenigan suggests that housebuilders and developers are prioritising existing plots on their sites rather than starting new ones. Completions have recovered well and in August the number of new home completions reached 97 per cent of the Q1 2020 average. The number of plots started has also recovered and July’s figure was only 15 per cent down on Q1. Meanwhile, the number of new sites started remain at just over half of Q1 levels, despite recovering to 69 per cent of the Q1 average in June.
The mismatch between the number of starts and completions will erode the construction pipeline if starts fail to keep pace with completions. If sustained, this will have long-term implications for housing supply and will put the government target of 300,000 homes a year in England by the mid-2020s at risk.
The regional picture
Construction activity returned in England faster than in Scotland and Wales due to the different restrictions imposed. While not all regions in England returned at the same pace, some were able to resume construction activities as soon as lockdown restrictions were relaxed.
London led the way in this respect accounting for 41 per cent of plots started on UK construction sites in May, up from 19 per cent in March. And the North West witnessed the greatest recovery in June with the number of sites starting returning to the levels seen in January and February.
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