This week the ONS released its construction industry data output for August. This shows that the total construction output for August is estimated to be 11.6% lower than August last year. Unfortunately the reliability of the ONS data is questionable, with them making significant corrections recently and now admitting that there was an error in their formula, which contributed to a recent change from a fall of 0.5% to a fall of 15% in output for the Commercial sector. Possibly more reliable are Glenigan who reported that the underlying value of construction project starts is 11% lower than a year ago.
The Construction Products Association published its latest construction industry forecasts. These are more pessimistic than the Summer edition, predicting a 6.3% fall in construction output this year followed by a further fall of 1.4% next year. They expect construction output will return to growth in 2014.
Despite the bleak forecasts for construction output, the national housebuilders have been able to make the market work to their advantage and grow profits. Latest to announce are Redrow PLC showing an increase in pre-tax profit of 70%, and Bellway with a 57% increase in pre-tax profit.
The Nationwide House Price Index shows that in September house prices fell by 0.4%. This means that house prices are now 1.4% lower than one year ago, according to Nationwide. The Halifax House Price Index has reported that house prices were 0.5% lower in the three months leading to September than in the preceding 3 months. Like construction activity, the averages hide the divide between the area inside the M25 which is showing stronger performance compared with the remainder of the country.
Mark Prisk has made several noteworthy announcements over the last month. The first is that £1billion will be used to help boost the economy by spending it on improving sub-standard council homes, this has the potential to create immediate demand, unlike many of the previous infrastructure announcements with long lead times. Another announcement is that there have been the first allocations of £240 million to help first time buyers (and National Housebuilders) benefit from the FirstBuy scheme. Mr Prisk has also said that £40 million will go to 41 developers to help first time buyers.