Greater certainty needed as construction output declines, says RSM

Commenting on construction output data for June 2021, Kelly Boorman, partner and construction industry analyst at RSM, commented: ‘Construction output increased by 3.3 per cent in the second quarter of the year, reflecting a rise in new work, particularly in infrastructure and repair and maintenance. Although growth did slow on a monthly basis in June, this was likely a result of bottlenecks in the supply chain and labour force. 

‘In housing which has experiencing rocketing demand, there is no doubt that the temporary Stamp Duty Land Tax (SDLT) relief has supercharged the market as we have seen property prices up by 13.4 per cent from last year, the largest growth since November 2004. 

‘Housebuilders have capitalised on this demand and underpinned by incentives such as 95 per mortgages and Help to Buy, the sector has recovered a lot of lost ground from 2020 (up by 50 per cent on a yearly basis). However, the rate of expansion declined in the second quarter of the year as the SDLT holiday deadline loomed, depressing new housing supply and development. 

‘The construction sector is clearly stating its case as ready to deliver on the ground, but post-covid recovery will require a surge in work that cannot be met with current material and labour levels. Longer term certainty is also required to ease the volatility we have seen in housing output and values.’