Residential sector bounces back in October, says Barbour ABI
The residential sector accounted for almost half (49%) the value of all construction contracts won in October, according to the latest Economic & Construction Market Review from industry analyst Barbour ABI.
A total of £3.4bn of contracts were awarded in the residential sector in October, the largest value since Barbour ABI started tracking the sector’s values in this way in January 2011.
The past month’s figures represent a huge rise from September when the gross value of residential contracts was £1.5bn and represented 16% of total construction value. In August residential accounted for 31% of total construction value with £1.6bn of contracts.
The dramatic rise is due to an increase in private housing, which accounted for 81% of all residential contract values. According to Barbour ABI, major projects throughout the UK contributed to the increase, including the £120m City North development in London’s Finsbury Park, and the £70m Oakfield Road project in Altrincham, which is set to deliver 59 apartments.
After private housing, the next largest project type were hostels/halls of residence projects, which accounted for 13% of the value of residential contracts awarded.
Projects awarded by sector October 2015
Source: Barbour ABI
Although the value of residential contracts rose significantly, the total number of units (based on a three-month rolling average) only rose 2.8% to 11,568. This is a slight increase compared to September, but is 14.7% lower than October 2014, indicating that there is an increase in the number of high value schemes rather than high density ones.
Michael Dall, lead economist at Barbour ABI, said: “After a slower Q3 for construction activity it was vital for the industry as a whole that residential bounced back to help regain momentum.
“Although the residential contract value figure increased in October, the number of units awarded increased by only 2.8%, suggesting that recent schemes are more focused on high value rather than high density, which does not necessarily bode well for those calling to increase housing figures.
“However, October’s total residential value was the highest for over three years and dominated by private housing, which has to be seen as a positive for the industry, economy and investors.”
There was an increase in construction activity levels overall in October with the value of new contracts awarded at £7.4bn, based on a three-month rolling average. This is a 5.3% increase from September and a 24% increase on the value recorded in October 2014.
Following the residential sector, the commercial sector had the next highest share of contract value, accounting for 15% of all contracts awarded in October, with infrastructure the third highest with 13%.
The majority of the contracts awarded in October by value were in London, accounting for 17% of the UK total. This is followed by Scotland with 15% of contract value. In London, the major commercial office project at the Olympic Park, known as the International Quarter, was awarded in October with a value of £15m.