The ONS has released its figures for Output in the Construction Industry March and Q1 2014. These figures show that construction output in Q1 2014 has increased by 0.6% when compared to construction output in Q4 2013. Output has risen by 5.4% when compared to Q1 2013, which is attributed to a total combined increase of 1.5bn in total new work and repair and maintenance. The Construction Products Association has also released their Spring Forecasts for the Construction Industry, highlighting that the industry is expected to grow 18% by 2017, adding an extra £20bn to the UK economy. The Construction Trade Survey shows four consecutive quarters of growth in activity for the first time in six years, although it also raises concerns about rising costs and skills shortages.
The growth of the construction industry is supported by the April Markit/CIPS Construction Managers Purchasing Index falling slightly from 62.5 in March to 60.8 in April, which is still significantly higher than the threshold of 50.0 and remains above the survey average of 54.3. The survey also indicates that housing activity growth is approaching a 10 year high.
The Nationwide House Price Index has reported that house prices increased by 1.2% in April 2014 making them 10.9% higher than April 2013, which means annual house price growth is in double digits for the first time since April 2010. Yet the Halifax House Price Index reported a fall in house prices of 0.2% in April 2014, although their annual house price index still reports a growth of 8.5%.
With house prices rising so quickly, they are starting to pose a problem for first time buyers. According to The Economist house prices are not yet unsustainable but could become so in the near future.
This return to growth has caused construction firms to be the most confident they have been since the start of the recession, yet some are warning of a supply shortage in the near future and bloating land costs posing a hindrance to recovery. To identify potential opportunities and avoid threats then consider our tailored market forecast, contact us to find out more.