Housebuilding slump sees growth hit three-year low

The pace of growth in housebuilding has slumped to its lowest levels in more than three years despite expectations that super-low interest rates will remain for years to come.

A potential weakening of the global economy appears to have weighed heavily on the industry, according to a closely watched survey from the Chartered Institute of Procurement and Supply. While overall construction-industry activity grew at the same pace as last month, housing was surprisingly weak.

CIPS chief executive David Noble said the construction sector was “awash with caution and hesitancy” at a level not seen since the pre-election lull last year when the industry feared a Labour victory or hung parliament.

“Where the housing sector was once the star of the show, it became the weakest performer in March,” said Noble.

Tim Moore, senior economist at Markit, which compiled the data for CIPS, added: “UK construction is experiencing its worse growth phase since the summer of 2013. Residential building has seen the greatest loss of momentum, which is a surprising reversal of fortunes given strong market fundamentals.”

Major infrastructure projects boosted the sector, but overall construction growth remained unchanged on February’s 10-month low, posting 54 points on the index where anything above 50 indicates growth.