Housebuilding output dropped by a fifth in 2020

Housebuilding output fell by a fifth last year as the industry struggled to cope with the coronavirus pandemic, according to the first official figures covering the whole of 2020.

Construction output figures released this morning showed there was £35.8bn of housebuilding work in 2020, a 20.1% fall on the 2019 number. The output figure was the lowest number since 2015.

The figures from the Office of National Statistics said that the year ended with output falling by 2.6% in December, seasonally adjusted, to £3.38bn. Output for the final quarter of the year, however, continued to rise overall as the housebuilding industry saw a strong recovery from the initial spring lockdown.

The ONS said housebuilding work rose by 6.3% in the final quarter, following a record 78% recovery in the third quarter.

However, these rises left the housebuilding industry still well down, in output terms, on where it was at the same point last year. Output for the quarter was 8.8% down on the fourth quarter of 2019, with the December figure itself 9.1% down.

The housebuilding sector saw continued growth in new orders in the last quarter of the year, with new orders rising by 6.4% - putting it almost exactly level pegging with the same quarter in 2019.

The housebuilding numbers came as construction activity overall fell by 12.5% last year as the country’s economy shrank by the biggest amount in 300 years after being ravaged by the covid-19 pandemic.

The slump is the largest since 1709 when the economy fell by 13.4%, though this is well before proper economic statistics became commonplace.

The Office for National Statistics said gross domestic product (GDP) fell by 9.9% in 2020 as no sector of the economy was left unscathed by lockdown.

Last year’s fall for construction was the biggest of all the four sub-sectors measured by the ONS with agriculture slumping 9.4%, services slipping 8.9% and production heading south by 8.6%.

According to international comparisons with other leading economies, UK output fell the most in the second quarter of last year when the pandemic first took hold with a fall of 19%. The next biggest faller during the period was Spain which saw its economy reverse by 17.9% with the falls for the US and Germany both below 10% - at 9% and 9.7% respectively.

The 19% fall for the UK economy followed a 2.9% slump in the first three months of the year which sent the country officially into recession.

Despite a fall in output in December, construction grew by 4.6% in the last quarter of last year helping the economy avoid a double dip recession, which overall grew by 1% in the last three months of 2020 following growth of 16.1% in the third quarter.

It said all types of work, apart from private commercial, contributed positively to growth during the three months with the largest contribution coming from private new housing, which grew by 6.7%.

But output in construction fell by 2.9% in December 2020, following seven consecutive months of growth.

All types of work fell during the month with the decline driven by falls in both private new housing and private commercial of 3% and 6% respectively.