Registration figures released today show housebuilders are gearing up for a significant new wave of activity. The number of new homes registered prior to the start of construction with the National House-Building Council in the UK during the first quarter of this year reached 31,739 – the highest level for this period since 2008 and a 22% increase over last year.
London registrations led the surge, with a 61% increase in new houses registered in the first quarter of 2013 compared to Q1 last year. The landmark Battersea Power Station redevelopment helped boost the figures as more than 800 new properties were registered during the first phase of the project. Over the next 15 years, more than 3,000 new homes will ultimately be built on the site.
The nationwide housing rise has been fuelled by an increase in public sector registrations of 43% in Q1 this year compared to the same period last year. The main driver for this rise has been the government’s £2.2 billion Affordable Homes Programme which aims to deliver 170,000 new homes by April 2015 and in some parts of the country is only now getting into gear.
Commenting on the Q1 figures, NHBC commercial director Richard Tamayo said: “This rise in new homes being registered – particularly affordable homes – is very encouraging news for Britain’s house-building industry which has been through a very difficult time in recent years. These figures may be an indication that much-needed confidence is returning to the industry, although they should be viewed in the context of overall new homes volumes remaining significantly below historic levels.”
Marginal decline
Further evidence of the shifting market comes in the Markit/CIPS UK index, which signalled only a marginal decline in output in April, with the rate of contraction the slowest in the current six-month period of falling activity.
Commercial activity dropped for the third month running, while work of civil engineering projects decreased markedly. The rise in housing activity was only marginal, but nonetheless the strongest since April 2012.
Subdued underlying demand persisted in April, as highlighted by a fall in new business volumes for the 11th consecutive month. The current period of declining new business is the longest since that recorded in 2008/09. That said, the latest drop in new work was only marginal and the slowest since last October. April’s decrease in new business was also much slower than last December’s 44-month low.
Employment numbers were broadly stable in the UK construction sector at the start of the second quarter.
Anecdotal evidence from survey respondents suggested that subdued demand patterns had led to cautious job hiring trends, but a degree of optimism about the year-ahead outlook had helped stabilise overall staffing levels. More than twice as many survey respondents anticipate a rise in their output over the next 12 months as those that forecast a reduction. The degree of positive sentiment was only slightly weaker than March’s recent high.
However, the Office for National Statistics’ GDP Preliminary Estimate for Q1 2013 was less positive reading. Although it showed the UK has narrowly avoided a triple-dip recession, with the economy growing 0.3% in the first quarter of the year, construction was the worst-performing sector, declining by 2.5% in the last quarter – 5.9% on the Q1 2012.
The NHBC survey is the latest to point to the corner turning in construction. The latest forecast from the Construction Products Association acknowledges output will continue to fall by 2.1% in 2013, but predicts total construction output will grow 1.9% to £97bn in 2014, thanks largely to investment in private housing, infrastructure and factories, followed by a 3.8% rise in 2015 and a 4.7% rise in 2016.
The RICS construction market survey last week also reported increases in workload already coming through, and more construction professionals saw workloads rise last quarter than at any time since the end of 2007. The RICS said a main driver was the boost in private housing construction.
