Housing boom shifts to ‘Northern Powerhouse’, says Scape’s ONS analysis

An analysis of the industry’s £140bn output recorded between Q2 2014 and Q2 2015 by construction framework organisation Scape has highlighted regional variations, with evidence that housing projects in particular are shifting away from the overheated south east and towards Scotland and the emerging Northern Powerhouse.

Scape’s Construction Industry Tracker 2015 – Regional Edition reveals that the Northern Powerhouse region’s construction of homes grew by 30% in 12 months.

Overall, house building was up by more than 8% on the previous year, but most growth was recorded in the north, with construction output up by 33% in the north west and almost 30% in the north east.

The Northern Powerhouse regions – the north west, the north east and Yorkshire and the Humber – also saw total output of £29.1bn (or 21% of the total), just short of London’s total output of £30.33bn, or 22% of the total. 

Construction output

Source: Scape Group

Mark Robinson, Scape Group chief executive, told Construction Manager: “The balance of the UK construction industry is shifting northwards – if the trend continues, we could even see construction in the Northern Powerhouse overtake London in years ahead.

“And this is just the beginning of the north’s journey to greater devolution, with more deals likely to follow those given to Manchester, Sheffield and the north east, providing a further boost to confidence and putting the northern cities in control of their future. With such strong foundations, it is no surprise that the government is so keen to back the Northern Powerhouse.

“Although construction output figures for the UK have been lower than expected in recent months, with planning reform and a new National Infrastructure Commission set to speed up decision making, the longer-term outlook for the construction industry is very positive.”

New housing

Source: Scape Group

The report makes positive reading for the Scottish government, with a strong performance across all sectors of the construction industry and a 20% increase in overall construction output.

London’s increase in output was only 3.53%, with an 18.98% increase in private sector output being offset by a 21.65% decline in public sector output.

That pattern was reversed in Yorkshire and the Humber, which saw a 33.93% increase in public sector output, compared to an 11.% decrease in private sector output and a 7.28% output drop overall.

In London and the south east, where the housing crisis is most acute, construction of public sector housing fell dramatically. In the south east, construction of public sector housing fell by 25%, while in London there was a 32% fall.