The result of the UK general election has created greater uncertainty during a critical time, a time when Brexit talks are set to begin. Changes made to the cabinet are also contributing to this uncertainty. Housing Minister Gavin Barwell lost his seat in government, however he has been appointed as Teresa May’s chief of staff. Alok Sharma has been appointed as the government’s new Housing Minister, replacing Gavin Barwell. Sajid Javid has been reappointed Communities and Local Government Secretary, where he retains responsibility for house and planning. And Michael Gove has been appointed to the post of Secretary of State for Environment, Food and Rural Affairs.
Commenting in AJ on the loss of Gavin Barwell as Housing Minister, Nicholas Boys Smith, director of Create Streets, said: “There will be many from across the housing sector and political spectrum who regret that. He was widely seen as getting on top of his brief and being impressively pragmatic and hard working.” This is echoed by the British Property Federation who say “the loss of Gavin Barwell as Housing Minister is a frustrating disappointment given the excellent work he has put in over the past year.”In Dezeen there is some optimism “A hung parliament will inevitably lead to greater questioning of the direction the UK will take. This will bring yet more problems, but also opportunities that I for one welcome,” said architect David Kohn.
The Construction Products Association response to the election result calls for the prompt delivery of the government’s National Infrastructure and Construction Pipeline with Dr Diana Montgomery commenting “We need certainty and clarity in order to address the serious challenges and opportunities facing UK construction.”
Housebuilder Crest Nicholson have announced their half year results saying “The outcome of the UK General Election may introduce some uncertainty in the short term but we expect the new build housing market to remain robust.” Latest market figures reflect this uncertainty, yet the housing market remains strong.
The ONS have released their Construction output in Great Britain: April 2017 and new orders January to March 2017, this shows that construction output fell 0.6% on a 3 month on 3 month basis, driven by a 0.9% fall in all new work. Making this the first 3 month on 3 month fall since September 2016. Reinforcing this the latest Economic & Construction Market Review from Barbour ABI, shows all construction activity fell sharply in April 2017, as new contracts awarded decreased by 15.9% from March 2017, based on a 3 month rolling average. The London Office Crane Survey Summer 2017 from Deloitte also shows that overall construction levels have marginally dipped, despite reporting an above average volume of new starts.
In contrast the Markit/CIPS UK Construction PMI May 2017 report shows construction activity rebounded in May 2017, mainly helped by the fastest upturn in residential work since the end of 2015. The Index registered 56.0 in May 2017, a sharp increase from 53.1 in April 2017, signalling the strongest expansion of overall business activity for 17 months. Latest Glenigan data also shows a sharp upturn in private housing starts, up by 36% in the quarter to April, compared to the same period of 2016.
New research from Glenigan shows that the planning pipeline for new-build private housing expanded at its fastest rate in over a decade in 2016, as the number of units included in detailed planning applications submitted during last year leapt by more than half. However this comes as the 2017 Homeowners Survey reveals over 250,000 people have given up on the idea of homeownership, with increasing house prices and large deposits cited as being a major barrier.
Offsite modular construction is seen as one of the potential answers for fixing our broken housing market. The role of offsite manufacture in housing continues to gain importance, as L&G announce the appointment of Rosie Toogood as CEO to lead L&G modular housing and their new Director David Jones joins from Berkeley Homes. Meanwhile Berkeley are reported to be looking for a site for their own modular factory. And Swan Housing Association has taken possession of its new factory in Basildon which will produce modular homes for its nearby Beechwood site.
Glenigan report that prospects for capital investment in the education sector have received a boost, as the shift towards modular buildings takes another step forward with a national £225 million framework going live this month.
Latest figures and data from Rightmove show that in the four weeks to May 2017 house prices sought by sellers rose 1.2%, pushing the average asking price up to a record high of £317,000. This is reflected in the latest ONS house price inflation figures, which report that average house prices increased 4.1% in the year to march 2017.
The Halifax House Price Index reports in May 2017 house prices increased 0.4% compared to April, and prices in the three months to May were 3.3% higher than in the same three months a year earlier. Yet the Nationwide House Price Index states that in May 2017 house prices were 0.2% lower than April, making this the 3rd consecutive monthly decline for the first time since 2009. And annual house price growth slowed to 2.1%, the weakest in almost four years, evidence the housing market is losing momentum.
Barratt Developments PLC has issued a trading update for 1st January 2017 to 7th May 2017 showing a strong performance and confident outlook, as total completions for the year are expected to be around 17,350, the highest number of completions in 9 years. Alongside this Glenigan report Barratt as resuming its position as most active volume housebuilder in terms of developing land through the planning system, with a 65% rise in the number of units included in detailed planning applications made by Barratt last year compared to 2015.
Market intelligence from Turner and Townsend shows that contractors expect tender prices to increase in 2017. The cost of construction projects in London are forecast to rise 4.1% in 2017, and in Manchester there is an expected increase of 3.6%, demonstrating the traditional north-south divide in build costs is closing.
And finally, new data has revealed construction equipment exports remain buoyant, as figures from the Construction Equipment Association (CEA) show growth in exports during the first quarter of 2017 with numbers reaching £700m, the highest level seen since Apr-June 2015.