Good news again as the UK construction industry heads into a period of sustained growth; with expected growth to be greater than 4% for 2014 and 2015. RIBA Insight’s monthly briefing states that the UK Construction market is leading the way for construction growth across the whole of Europe. This expected growth is based on the ONS’ Output in the Construction Industry for June and Q2 2014, which reports that annual growth for construction output in Q2 2014 compared to Q2 2013 is estimated to be 4.8%. The Construction Products Association’s Summer Forecast also highlights that in the next 2 years construction is forecast to grow about 10.0% and contribute nearly £11 billion to the UK economy.
In the quarter to July, output volumes in the manufacturing sector grew at the strongest pace for five months. The CBI quarterly Industrial Trends Survey also reports that firms are upbeat about the next quarter, with expectations for total new orders growth at their strongest since 1977. The NSCC State of the Trade Survey reports 57% of specialist contractors saw their orders increase in the second quarter of 2014, compared to 27% a year ago.
However the Glenigan Index shows a slowing in construction growth rate, with the value of projects starting on site May to June 2014 being only 10% higher than last year, falling from 15% recorded last month. This is mainly due to a fall in new residential work and declining social housing work. This is enhanced by the Markit/CIPS Construction Purchasing Managers Index Showing a fall from 62.6 in June to 62.4 in July; however this remains above the neutral mark 50.0 for the fifteenth consecutive month.
The Housing and Communities Agency has released its Housing Market bulletin for July 2014. This shows a summary of the housing market, the economy and housing forecasts. Included in the bulletin is that the Nationwide House Price Index has reported an increase of 1.0% in house prices during June 2014, and that the Halifax House Price Index has reported a decrease of 0.6% in June 2014. Rightmove House Price Index have revised their year end forecast, announcing new seller asking prices will see an 8% annual increase at year end. A bouyancy that builders are already enjoying, as Taylor Wimpey released their half year results for period ended 29th June 2014. These results show that Taylor Wimpey have increased pre-tax profit by 63.7%, from £109.0m to £178.4m. They attribute this increase in profit to their focus on the “security of supply” of materials such as bricks in the first half of 2014. But demand for housing may have peaked according to the latest RICS survey which reports that demand has flatlined as the housing market ‘pauses for breath’.