Featured Region: North East

Underlying value of construction projects starting on site. (Excludes individual projects of more than £100 million and framework agreements).

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The North East consists of the following Counties: Cleveland, County Durham, Northumberland, Tyne & Wear.

The North East had been one of the regions hardest hit by the credit crunch and the subsequent deterioration in private housing construction activity. Construction prospects deteriorated over 2010 but has since stabilised over 2011. Though over the first half of 2011 here was a 4% increase in underlying starts, weakness in the final six months meant the region ended 2011 with no growth on 2010.

Private housing is a key sector for construction in the region. Project starts picked up in 2010 as house builders responded to a gradual improvement in housing market conditions. In addition, the flow of social housing, coupled with the recovery in the private house markets, fuelled much of the growth in the North East over 2010. Together, social and private housing accounted for 34% of the underlying value of construction starts.

Recently, stalling house prices and other economic headwinds have raised fears that private housing will remain under pressure near term. Underlying starts have fallen in response.

The non-residential private sector has suffered as well, as the small pool of medium-sized projects which helped bolster the value of construction starts has now dried up. Only office building escaped a decline in the first six months of 2011. There has been a pickup in projects over the latter months of 2011, but on the whole the construction industry in the North East has remained subdued.

Over last year, civil engineering has performed better than most sectors. Underlying starts on site over the year have doubled the value of starts in the same period during 2010. This was thanks to a number of medium sized utilities projects which started over the first half of the year.