The Construction Products Association have released their latest State of Trade Survey, reporting continued growth in sales of construction products in Q2 2016, making this the 13th consecutive quarter sales have increased. Manufacturers displayed pessimism about prospects for the year ahead, even though 75% of survey responses were received before the outcome of the EU referendum was known.
The Markit/CIPS UK Construction PMI shows construction output falling at its fastest pace since 2009, led by a steep decline in residential building and a reduction in commercial work for the first time since May 2013. Survey respondents widely linked the downturn in business activity to uncertainty ahead of the EU referendum, with just over 80% of survey responses received before 24th June. The index registered 46.0 in June 2016 signalling the weakest performance for 7 years; however the rate of contraction was slower than that seen during the 2008/09 downturn.
According to the ONS economic review for July 2016, house price growth and earnings growth have both picked up since the economic downturn, however at different paces, meaning that overall housing affordability has been deteriorating since 2013.
The Nationwide House Price Index reports that in June 2016 house prices increased by 0.2%, with annual house price growth increasing to 5.1%, however the north south divide has continued to widen in Q2 2016 as the south records the fastest rates of house price growth in Q2. The Halifax House Price Index reports that in June 2016 house prices increased by 1.3%, and house prices in the last 3 months (April-June) were 1.2% higher than the preceding 3 months. They also report that house prices in the 3 months to June were 8.4% higher than the same 3 months of 2015.
The House Builders Federation and Glenigan’s latest Housing Pipeline Report shows that the number of planning permissions granted for new homes in Q1 2016 remained high, overall 4% higher for the first 3 months of 2016 compared to 2015. This rise is mainly driven by an increase in private housing approvals.