By Legal Futures Associate Search Acumen
- Construction output fell 0.8% in May 2021 with the level of output remaining slightly above its pre-pandemic February 2020 level
- In contrast to the monthly fall, construction output grew by 6.3% in the three months to May 2021 compared with the previous three-month period, with increases in both new work and repair and maintenance of 6.6% and 5.8% respectively.
Andy Sommerville, Director at Search Acumen, says: “This latest data demonstrates how the construction industry is still operating at pace as it continues efforts to keep up with strong levels of demand in the housing sector.
“Despite the stamp duty holiday beginning to taper off, demand for new housing is still very strong due to ongoing tax incentives and low interest rates which are motivating buyers and keeping house prices at very high levels. While the construction sector is being buoyed by this demand, it is important that we do not overlook some very real risks.
“The realities of Brexit and the impacts of the pandemic are creating a shortage of raw materials and labour. While the upward pressure on build costs is largely being mitigated by buyers that are keen to move and willing to pay high house prices to do so, it is likely that construction activity is being severely constrained from reaching its true potential by these dynamics and we could see some further drop offs in activity in the short term.
“While this may be the case in the short to medium term, we expect demand for housing to largely outweigh these pressures over coming months, and ultimately outlast them long term, especially if new planning regulations are introduced to improve scheme viability. This will unlock higher levels of growth in construction outputs going forward, facilitating future transactions and catalysing activity in the market. The huge levels of housing demand that we have witnessed in recent months have put considerable pressure on lawyers and we have seen how important technology has been in enabling conveyancers to keep transactions flowing in unprecedented conditions. Continuing the progress that has been made in digitising the property sector is vital if we are to ensure the resilience of a market that is likely to be characterised by high transaction levels for some time to come.”