Housebuilding in the UK has seen its sharpest rise in over two years following the removal of planning restrictions by Housing Secretary Angela Rayner. In September, housing development surged, with the S&P Global Construction Purchasing Managers Index (PMI) rising to 54.3, up from 52.7 in August. This marks the fastest pace of growth since March 2022.
The construction sector as a whole also expanded significantly, driven by substantial growth in civil engineering projects, including energy infrastructure. The overall construction PMI jumped from 53.6 in August to 57.2 in September, the strongest reading in nearly two and a half years.
This surge comes after Labour introduced a new draft National Planning Policy Framework (NPPF), designed to boost housebuilding targets for local authorities and unlock green belt land for development. Additionally, falling mortgage rates have further supported demand for new homes following the Bank of England’s rate cut in September.
Economists, including Elliott Jordan-Doak from Pantheon Macroeconomics and Matthew Pointon from Capital Economics, pointed to the combination of lower interest rates and Labour’s policy reforms as key drivers of this renewed confidence in the construction sector.
For Labour, these figures align with their manifesto commitment to achieving the highest sustained economic growth in the G7, with housing playing a central role in their strategy. Matt Swannell, Chief Economic Advisor to the EY ITEM Club, noted that the construction sector looks set to support growth through the latter half of the year, even as GDP growth slows slightly.
