Construction starts have begun 2025 on a positive note, according to Glenigan's January 2025 Construction Index. Despite the value of project starts declining in the final three months of 2024, they rose by 2% compared to Q3 when seasonally adjusted. Encouragingly, some sectors also rallied, especially private residential construction. This micro-sector contributed to a 7% overall residential sector increase in Q4. In the non-residential sector, continued strong performance in Hotel & Leisure and a handful of other sectors were integral to overall growth of 3%.
Starts Edge Slightly Higher
Glenigan's Economic Director, Allan Wilen, stated: "As expected, seasonal factors affected work commencing on-site during the final quarter of the year. However, after adjusting for the Christmas wind-down, starts managed to edge slightly higher during these three months. This was partly driven by a 9% rise in private housing projects, indicating that developers may be entering the New Year with renewed confidence. Declines in civil engineering and infrastructure starts, which weakened in Q4, indicate a degree of uncertainty persists regarding public sector funding. The Government's Spring Spending Review is highly anticipated, and many are waiting on updates for a number of major projects mentioned in the Autumn Budget Statement, as part of a wider package promised to kick-start construction activity."
Residential Sector Up
The residential sector analysis reveals that construction starts increased by 7% during Q4 2024, but stood 3% lower than the same period last year. Private housing increased by 9% against the preceding three months and was 1% above 2023 levels. In contrast, social housing performed poorly on both counts, with work starting on-site falling 1% against the preceding quarter and standing 17% down on the previous year.
Non-Residential Mixed
The non-residential sector's vertical performance was mixed, despite posting overall growth against both periods. Hotel & leisure continued to rise, increasing 2% against the preceding three months to stand 30% up on the previous year. Education project starts also experienced a strong period, increasing 12% during Q4 2024 to stand 22% higher than a year ago. The industrial sector starts also had a positive Q4, growing 8% against the preceding three months and 30% against the previous year. Office project-start performance was mixed, increasing 14% during Q4 2024, yet finishing 28% lower than a year ago.
Community Projects Plummet
Poor performance was evident across all other verticals, with community & amenity project-starts plummeting 23% against the preceding three months. Starts also tumbled 19% compared to the previous year. Civils performance slumped by 29% in Q4 2024, to sit 20% lower than a year ago. This can predominantly be attributed to a crash in utilities starts, which fell 50% against the preceding three months and 45% against the previous year. Infrastructure work decreased 10% against the preceding quarter but grew 5% compared with the previous year.
Regional Performance Mixed
The regional performance was also mixed. The North East stood out, with project-starts increasing 88% during Q4 to finish 5% up against the previous year. The South East also experienced relatively strong growth, increasing by 11% against the preceding three months to finish 46% above 2023 levels. The North West and Yorkshire both performed well against the previous quarter, with the value of starts increasing 27% and 11% during Q4 2024. However, performance in both regions declined 5% against the previous year. London experienced poor performance, with the value of starts decreasing 13% against the preceding three months and remaining 35% down against last year.
