North East construction’s ‘optimistic’ impact on region’s economy

The region showed the strongest performance in the UK for the second quarter of 2024, with project starts increasing by 56%.

A report from consultant RLB predicts the upward trend will continue throughout the year creating an optimistic mood, although the challenges around skills shortages will continue.

New analysis by Adderstone Living, an affordable house builder headquartered in Newcastle, also confirms the optimistic mood within construction in the region and highlights the impact the industry has on economic growth across the North of England.

The homebuilder’s current North East and Yorkshire building sites are producing £39m in economic output.

As well as this, 75% of the company’s on-site construction jobs are undertaken by people who live less than a 20-mile drive to sites, supporting local employment across the region.

According to RLB, planning approvals for residential and infrastructure projects increased in Q2 and remain the largest sectors in the region, while hotel and leisure developments also did well in terms of approvals granted.

Although there is caution amongst some private-sector housing developers, activity is ongoing, especially in the build-to-rent sector where demand in the region remains strong.

For example, Forth Yards, the 50-acre brownfield site on the River Tyne, could supply 2,500 new homes to Newcastle and has received a £5m funding boost from NECA.

However, due to the skills shortage in construction, labour prices continue to increase generally, adding further pressure to the viability of projects.

Lucy Fisher, senior associate, RLB NE comments: “The sentiment in the region is palpably optimistic, with big regeneration plans being developed and implemented by local authorities, some of which have been bolstered by initial funding from the new North East Combined Authority.

“The future of the market will likely depend on the ongoing response to economic conditions and how challenges such as the need for affordable housing and the skills shortage in the industry are managed. We’re likely to have to wait until the Budget in October to appreciate the full impact of what a Labour government means for the North East’s construction sector.”