The conflicting headlines continue – is it a start to double dip recession or confirmation of the recovery?
On the positive side figures published by the Office for National Statistics show an 8.6% growth in construction output from April to June this year. The Civil Engineering Contractors Association say 27% of their members reported an increase in workload over the same period last year. Glenigan are forecasting a 10% growth in office starts for the second half of the year and there is a growth in activity from the supermarkets. A number of leading companies have announced improved turnover and profits including Taylor Wimpey, Mears Balfour Beatty and Travis Perkins.
Less encouraging is the Chartered Institute of Purchasing and Supply’s report that growth in construction activity slowed in July following 5 months of steady increase. But note this is a slowing, not a fall. RICS reported that most sectors saw a drop in workload, the exceptions being private commercial and residential which were broadly unchanged. Glenigan also noted a decline in projects starting on site from May to July compared to the previous 3 months.
Also concerning is the predicted fall in house prices and demand. In their August property survey Rightmove show a fall of 1.7% for the month with a rise of 4.3% for the past year. But there are very mixed opinions about this. In a recent piece in the Sunday Times they had 6 experts predicting house price movements with guesses (and that’s all you can really call it) ranging between a house price fall of 4% to an increase of 5% by the end of 2010 and for 2011 expectations ranged from a fall of 5% to an increase of 3%.
In general, housing remains an area of uncertainty, with more councils freezing plans for large scale developments required by the previously government’s Regional Spatial Strategy. The National Housing Federation estimates that plans for 85,000 homes in England have been dropped because of this change in policy.
Against this we are seeing the Homes & Communities Agency releasing previously stalled Kickstart projects with 16 schemes in London, worth £51.7 million, now able to proceed.
The Federation of Master Builders is also reporting a continuing decline in workload for the 10th quarter, although they say the rate of decline is slowing.