“With the EU referendum just around the corner, it comes as no surprise that we are seeing the brakes come on in the construction industry, amidst a cloud of uncertainty. This has resulted in construction output declining 1.1 per cent on the quarter in Q1 and 1.9 per cent on the year with one of the main downwards pressures being lack of new work, which has fallen 0.6 per cent on the quarter. Foreign investment in infrastructure has plugged some of the gap left by the public sector in the past few years, and that could now be at risk if uncertainty continues to drag on after the vote in June.
“However, whilst we are seeing the effect of Brexit on infrastructure, it does not appear to have taken a hold on housing, with new housing up 4.8 per cent on the quarter and 3.4 per cent annually. This is good news considering the stock shortages we are currently experiencing, particularly in the Capital. With Sadiq Khan taking the helm at City Hall as Mayor of London, housebuilders will certainly have their work cut out to meet his target of 80,000 new homes a year. Public sector housing activity – which has been in steady decline over the past year – could also begin make a recovery as a result of Mr Kahn’s 50 per cent affordable housing target set to be brought in. If this is the case then public sector housing activity in London could reach a much higher level than in the rest of the UK.”
