The West Midlands faced a downturn in construction activities during the summer months.
- Project starts totalled £1.4bn, a decline from previous periods, highlighting regional challenges.
- Main contract awards saw a significant drop, indicating reduced market confidence in the region.
- Despite overall declines, social housing showed resilience, increasing in value compared to last year.
- The educational sector experienced growth in approvals, contrasting the overall downward trend.
During the months leading up to August 2024, the West Midlands confronted a downturn in construction activities, as evidenced by a marked decline in project starts. The total value of project starts reached £1.4bn, representing a 31 per cent drop compared to the preceding quarter and a 19 per cent decrease from the previous year. In particular, major projects valued at £100m or more experienced a steep decline, totalling £238m, which is a stark 61 per cent fall from the preceding quarter and nine per cent lower than the previous year. On the other hand, underlying project starts, which include projects under £100m, showed a modest decline of three per cent from the previous quarter, totalling £1.16bn, but were down 20 per cent from the past year.
The downward trajectory in construction activities was further evidenced by the performance of main contract awards in the West Midlands. These contract awards fell by 31 per cent from the previous quarter, reaching £1.25bn, and experienced a decrease of 12 per cent compared to the same period in the previous year. Notably, major project contract awards, which totalled £255m, saw a 63 per cent decline from the preceding three months. However, there was a silver lining as these contract awards marked an increase compared to last year when no large contracts were awarded. Underlying contract awards also reflected a contraction, declining two per cent quarter-on-quarter and falling 30 per cent year-on-year to total £995m.
Detailed planning approvals, an essential precursor to construction activities, exhibited significant reduction. These approvals aggregated to £1.29bn, a substantial reduction of 57 per cent compared to the preceding quarter, and were 16 per cent lower than the previous year. Major project approvals, valued at £226m, fell by 83 per cent from the preceding quarter but were an improvement over last year when no significant projects received approval. Despite stark challenges, underlying detailed planning approvals, valued at £1.06bn, fell by 19 per cent from the previous quarter and were down 31 per cent year-on-year.
Amid the overall downturn, specific sectors displayed varying resilience. Private housing, though accounting for 37 per cent of project starts at £516m, witnessed a notable decrease of 44 per cent compared to the previous year. In stark contrast, social housing experienced a robust period, with the value of starts growing by 33 per cent year-on-year, accounting for 15 per cent of the total value. Other sectors such as industrial, education, and infrastructure showed contrasting trends. The industrial sector, comprising 12 per cent of project starts, surged by 68 per cent to reach £168m. Education projects, accounting for 10 per cent, grew by nine per cent, totalling £140m, while infrastructure surged fourfold year-on-year to reach £129m, representing a nine per cent share.
The landscape of detailed planning approvals also aligned with these sectoral variations. Private housing maintained the greatest share at 31 per cent, despite a 55 per cent decline from last year, with approvals totalling £405m. The educational sector, however, displayed significant growth with a 189 per cent increase in approvals year-on-year, totalling £191m, accounting for 15 per cent of the regional total. Notably, the industrial sector grew by three per cent, accounting for 14 per cent, reaching £178m, while social housing approvals doubled from 2023 levels to total £153m, comprising 12 per cent of the total.
The West Midlands faced a significant downturn in construction activity, with varied performance across different sectors.
