The UK’s construction industry started 2017 on a high

The UK's construction industry started the year strongly as housebuilding dominated activity.

The value of new building contracts rose to £6bn in January, according to analysts Barbour ABI, with London accounting for over a quarter of contract value.

The capital was boosted by the One Nine Elms project in Vauxhall, the most valuable development in the month at £900m.

Read more: UK construction output beat expectations in December

The value of housebuilding contracts grew by 83 per cent year-on-year to reach £2.7bn. This was dominated by private housing which accounted for 91 per cent of the contracts, up from only two-thirds a year ago.

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Construction sector new build growth expected to dip before roaring back. (Percentage growth forecasts; source: Construction Products Association)

However, the outlook outside of the tight housing market was less promising, with the commercial and retail sector declining by 40 per cent year-on-year last month.

Infrastructure construction also hit the lowest point in a year as contract values fell for the 11th month in a row.

Government figures for construction output showed growth slowing in December to 0.6 per cent year-on-year, although mortgage approvals have continued to pick up from a post-referendum low to their highest level since March.

Read more: Construction output grew unexpectedly slowly in January

Barbour ABI figures also show £5.8bn of contracts nearing completion, suggesting a healthy pipeline of future construction work planned.

Michael Dall, lead economist at Barbour ABI, said: “Whilst the housebuilding sector is performing admirably, we expect to see its growth continue to flourish across 2017.”

“On the positive side, the number of projects awarded in January jumped by 50 per cent compared with December and 25 per cent when looking at January last year. These figures are encouraging and would suggest that work is most certainly on the way.”