The Construction Products Association’s latest construction forecasts gives a mixed picture for construction over the next two years, due to the impacts of the uncertainty following the EU referendum. Construction activity is expected to remain flat in 2017 and 2018; however this hides variation at the sector level, with growth in infrastructure and education offsetting falls in activity in areas such as commercial offices and industrial.
Current figures also provide a mixed picture. The Markit/CIPS UK Construction PMI October report shows business activity increasing at its fastest pace since March 2016. The Index registered 52.6 in October 2016 an increase from 52.3 in September 2016, and above the neutral value of 50.0 for the second month running. Yet latest figures from the Barbour ABI Economic & Construction Market Review, show that in September 2016 all contract activity decreased by 2.4% compared to August 2016 and is 17.1% lower that the value recorded for September 2015. The ONS have released their report Construction output in Great Britain: September 2016 & July to September 2016. Output increased by 0.3% in September 2016 compared to August 2016. Yet output was estimated to have decreased by 1.1% in Q3 2016 compared to Q2 2016, due to a decrease in all repair & maintenance, which was only partially offset by an increase in all new work.
The Construction Product Association’s latest State of Trade Survey shows continued growth for a fourteenth consecutive quarter in Q3 2016, with firms across all areas of construction reporting an increase in activity. However indicators of future growth weakened as activity may be slowed by inflationary pressures, caused by rising wages and imported material costs due to Brexit.
The Arcadis Spiralling Cost of Indecision report, which compares the 2015 and 2016 National Infrastructure Pipeline datasets, states that over the next five years the cumulative impact of delay to projects identified in the pipeline could see the UK economy miss out on £35bn of investment-related GDP.
Sir John Armitt, interim deputy chair of the National Infrastructure Commission, has said that the Government made the right choice in choosing Heathrow over Gatwick for expansion, and that Brexit made Heathrow the clear choice. Kamal Ahmed explains why Brexit is economic pain delayed and not cancelled, despite the economy beginning to show signs of recovery. And Refresh PR explain some of the key points as to how hard Brexit has hit the construction industry including reasoning behind some of the key industry figures since the vote. What does Chinese Investment & Brexit Mean for UK Construction? X4 Group explains how Chinese investment is set to change the face of UK construction by helping construction reach an international standard and how it will help grow key infrastructure. Raising standards is a theme echoed by The Farmer Review: Modernise or Die, saying that construction’s long standing problems must be addressed or it faces ‘inexorable decline’. The review then goes on to give 10 recommendations on how the construction industry might address its problems.
The House of Commons Library briefing paper summarises early indications of the impact of Brexit on the UK housing market and house building industry. Research undertaken by The Homebuilding & Renovating Show shows that, 83% of self-builders are continuing projects despite fears over Brexit and only 1.8% have decided to cancel projects, with 64% saying they are confident that the housing market will remain stable post Brexit.
The latest residential market survey from RICS shows that homebuyer demand has increased for the second consecutive month in October 2016; however the supply of available homes remains restricted, fuelling a rise in prices. The NHBC reports that almost 36,000 new homes were registered in the UK in Q3 2016, with the overall number of new home registrations virtually identical to the same period last year, when 35,954 new homes were registered. The Council of Mortgage Lenders estimates that gross mortgage lending decreased by 7% in September 2016 reaching £20.5bn compared to the £22.1bn reached in August 2016.
There have been some conflicting reports of how house prices have changed. The ONS House Price Index reports that house prices increased by 8.4% for the year to August 2016, up 0.4% on the year to July 2016. Whereas The Halifax House Price Index reports in the last 3 months (August – October) house prices were 0.1% lower than the preceding quarter. And in further contrast to this the Nationwide House Price Index reports that in October 2016 house prices were unchanged month on month, with annual house price growth slowing to 4.6%.