Market outlook remains positive, with the latest CPA Construction Trade Survey showing that construction activity rose again in Q1, the first time in six years that the industry has enjoyed four consecutive quarters of growth. Housing is a key driver of this but The National Housing Federation has reported that the London market is beginning to overheat and could stifle the rest of the industry’s economic recovery. The report outlines that house prices are now 16 times the average wage in the capital and are expected to rise 43% by 2020.
To support this the Nationwide House Price Index reports that house prices in May 2014 have risen by 0.7%, making them 11.1% higher than in May 2013. The Halifax House Price Index reported May house price rises of 3.7%.
In The Federation of Master Builders’ State of the Trade survey for Q1 2014 SME workloads grew but at a slower pace than in Q3 2013. The survey predicts that in the coming few months output, prices, wages and material costs will all rise. Around 79% of the survey respondents anticipate these rises, with no firms expecting a decrease in costs.
This recover is finding its way to bottom lines, with brick manufacturers Michelmersh outlining the current market conditions in their AGM statement. They say that volumes for the brick industry increased by 26% with average price rise of 13% as heavy side building materials remain in short supply. Similarly MACE has just announced a 14% rise in pre-tax profits for last year with turnover up to £1.18 billion.
These latest figures, taken from Barbour ABI’s Economic & Construction Market Review, make interesting reading for the health construction sector in the UK, with the North West accounting for nearly two thirds of the total value of medical and health construction contracts in the UK in April.
Newly released research by CNinsight and Glenigan highlights the competitive pressures faced by the UK’s biggest contractors, it reports that contracts awarded across the industry in 2013 fell 6% to £48.1 billion, despite an 8% rise in the number of projects awarded. This is due to a fall in larger value schemes.The sharpest falls were observed in the community & amenity and civils sectors. Glenigan conclude that looking ahead, the construction pipeline is anticipated to grow firmly over the next two years.