The number housebuilding projects taking place in April fell 3.2% as builders delayed builds in the build up to the EU referendum, Markit PMI data shows.
With uncertainty around the market following the vote it appears that many firms mothballed projects and delayed new work whilst the picture became more clear.
The 3.2% fall during the month is the biggest drop since February 2014.
Chris Williamson, chief economist at Markit, said: “Construction looks likely to have contracted in the second quarter, adding weight to expectations that the overall pace of economic growth will have slowed in the second quarter from the 0.4% expansion seen in the first quarter. PMI data points to just a 0.2% rise in second quarter GDP.
“Going forward, prospects look worse, for the short term at least. The drop in activity seen in the June construction PMI was fueled by uncertainty about the mere possibility off ‘Brexit’.
“The reality of the UK leaving the EU and the associated heightened uncertainty, especially in relation to commercial property and housing investment, is therefore likely to cause further stress in coming months.”
Earlier this week the UK’s biggest housebuilder, Barratt, said it could reduce its speed of building as it prepares for a possible slowdown following Britain’s vote to leave the EU.