Social housing starts expected to rise in 2024 after 13% drop-off this year

Overall, UK construction starts will have fallen sharply by the end of this year, with a 20% drop forecast by the year end.

The plunge was partly driven by the fall-out from last year’s Mini Budget, and a weak outlook dented investor and consumer confidence. This was made worse for the private housing market by sharp interest rate rises in recent months.

The persistent economic disruption has prompted clients and developers to scale back on planned investments, causing detailed planning consents to fall back 10% during the first nine months of 2023. 

Main contract awards have also dipped, standing 11% lower during the third quarter than the same time a year ago.

Allan Wilen, economics director at Glenigan, said that overall construction can expect a “gradual improvement” over the next two years.

“Higher construction costs are expected to constrain social housing starts for the duration of 2023, despite increased funding for affordable housing,” he said.

“Additionally, the slowdown in the private housing market will have a knock-on effect on opportunities for associations to move forward with larger, mixed-tenure developments in partnership with other developers. 

“However, growth is forecast to accelerate next year as housing associations press on with their development plans, while a brighter economic outlook should also increase the viability of mixed-tenure sites.”

This latest analysis by Glenigan is broadly in line with its expectation from June that social housing starts would remain flat for the rest of the year.