Noble Francis

... & it is worth highlighting again this is even before the recent rise in Middle Eastern conflict, which will lead to rises energy, input & construction product manufacturing costs that will feed through to contractors over the coming months. (8/end)
#ukconstruction #ukhousing

Also note that in February's PMI, construction firms reported that margins were squeezed by the steepest rise in costs since July 2025 with higher prices for products such as concrete, copper, insulation & steel &... (7/n)
#ukconstruction #ukhousing

Business activity expectations in February were at its highest since December 2024. 42% forecast a rise & only 12% forecast a decline, but note when activity is low, firms tend to think (or hope) it will be better in a year's time. (6/n)
#ukconstruction #ukhousing

The PMI also reported a large & sharper decline in new work across the construction sector & lower volumes of new work was recorded every month since January 2025, unsurprisingly due to "sluggish demand conditions". (5/n)
#ukconstruction #ukhousing

Unsurprisingly, house building remained the weakest construction sector in February (37.0) & activity fell more sharply than in January. Commercial construction activity (46.5) fell slightly & at a sharper rate than in January as well. (4/n)
#ukconstruction #ukhousing

The PMI itself highlighted that "anecdotal evidence mostly cited weak order books and a lack of new project starts. Several firms also noted that exceptionally wet weather had delayed some work on site in February". (3/n)
#ukconstruction #ukhousing

It is worth noting that 1) the construction PMI is a quick survey of contractors & tends to reflect sentiment, 2) Activity in February was affected by persistent rain & 3) this is before impacts of Middle Eastern conflict on energy & materials costs. (2/n)
#ukconstruction #ukhousing

According to the latest S&P Global UK Construction PMI, UK construction activity fell again in February 2026 (it's 14th consecutive fall). 50=no monthly change & it was 44.5, a faster fall than in January (46.4). (1/n)
#ukconstruction #ukhousing

UK brick deliveries are a useful proxy for new house building starts in the absence of monthly starts data. Deliveries in January 2026 were 7.6% lower than a year earlier, according to the Department for Business & Trade. (1/n)
#ukhousing #ukconstruction

On average, house builders & developers in January 2026 were still of the view that starts would rise high single-digit from a very low base & completions would rise low single-digit from a low base this year, but with a high & now increasing level of uncertainty. (8/end)
#ukhousing #ukconstruction

More generally, the rise in Middle Eastern conflict means more uncertainty/risk to be priced in & CPI inflation will be higher & so there will be fewer, delayed interest rate cuts than expected & that will adversely affect mortgage rates & demand this year. (7/n)
#ukhousing #ukconstruction

Construction product manufacturers have stocks & they partially hedge energy prices (as energy costs can be up to 1/3 of total costs) so the recent energy price rises will take time to feed through to construction product price rises but they will rise significantly. (6/n)
#ukhousing #ukconstruction

3/4 of construction products used in UK construction are made in the UK but the rise in energy prices will lead to increases in manufacturing costs, especially for energy-intensive heavyside products such as bricks, steel & concrete. (5/n)
#ukhousing #ukconstruction

... the recent rise in the Middle Eastern conflict may adversely affect homebuyer confidence & push up construction product prices, raising house builder costs (& adding to further problems over site viability, especially at a time when demand is subdued). (5/n)
#ukhousing #ukconstruction

As ever, we won't have a clear sight of house building this year until we see what demand is like during the critical key Spring selling season for house builders (which is when demand fell away sharply last year) but it is worth being aware that... (4/n)
#ukhousing #ukconstruction

Some housing commentators said in December & January that there would be a rush in housing demand in 2026 Q1 after the impact of pre-Autumn Budget uncertainty in 2025 Q3 & Q4 but there is little sign of that so far (although it is still very early days into 2026). (3/n)
#ukhousing #ukconstruction

Deliveries & house building starts in January 2026 were affected by persistent rain & the fall compared with a year ago, in January 2025, was against a relatively high comparator, as house building demand was still recovering until April 2025. (2/n)
#ukhousing #ukconstruction

UK brick deliveries are a useful proxy for new house building starts in the absence of monthly starts data. Deliveries in January 2026 were 7.6% lower than a year earlier, according to the Department for Business & Trade. (1/n)
#ukhousing #ukconstruction

But then if they are unsure and there isn't an easy way of estimating it, why would they 'guess' that it would lead to the highest number of net additional dwellings in history within 3 years of a house building downturn? That seems like a very, very strange 'guess' to make...

Yes, and the unrealistic, wildly overoptimistic growth that the OBR has in house building was there in their November forecasts too.

As ever, for HM Treasury and the OBR, easing planning regulations is the panacea that will solve everything, despite the evidence…

It's even more unlikely if you accept their mortgage rate forecast (which looks ludicrously under-optimistic!)

It also goes without saying that the OBR's house building forecast, going from the low point of house building in 2026/27 to its highest levels ever just 3 years later, in 2029/30, & then rising even further in 2030/31, is ludicrously overoptimistic, as it was back in November.
#SpringStatement

... so the OBR forecasts that government misses its house building target by 400,000 homes or 26% & the OBR forecasts will be overoptimistic as recent Middle Eastern conflict means inflation will be higher & there will be fewer, delayed interest rate cuts than the OBR has forecast.
#SpringStatement

The OBR Spring Statement forecasts the low point of house building as next year (2026/27), with 1.3 million net additional dwellings in the UK in the 5-year Parliament. Government's 1.5 million target is England only over 5 years so the OBR forecast is equivalent to 1.1 million &...
#SpringStatement

Given the Spring Statement OBR forecasts are already too optimistic due to the impact of recent Middle Eastern conflict on energy prices, inflation & GDP, the OBR revising 2026 GDP growth from 1.4% in Autumn to 1.1% now is concerning as it will be revised down again in Autumn.
#SpringStatement

Yes, a certain amount of disruption couldn't be avoided but it could have been minimised a lot more by planning the process and resourcing it properly well in advance of introducing it, so that you can test it out in the real world before implementing it and find out what issues arise first.

More recently, in 2025 Q4, mid-rise development starts began to fall but it is only one data point so far & so it is far too early to say that there is now a shift from mid-rise residential developments back to high-rise, but it is worth watching. (11/end)
#ukhousing #ukconstruction

However, as there are far fewer mid-rise developments than high-rise and fewer flats per development, that increase in mid-rise development project starts wasn’t enough to offset the sharp fall in high-rise starts and it meant fewer new homes overall. (10/n)
#ukhousing #ukconstruction

This reflected a shift in investor & developer focus away from high-rise to mid-rise developments as there is a greater certainty over time & cost as they don’t have to deal with BSR delays, changes to specs and potential rejections. (9/n)
#ukhousing #ukconstruction