Housebuilding increases its hold on the construction industry
Published: 21 August, 2014
Figures released today (20 August) reveal that residential construction accounted for more than a third of the total value of contracts awarded in July.
Barbour ABI, which supplies construction data to the Office for National Statistics (ONS), Cabinet Office and Treasury, has published its latest Economic & Construction Market Review, showing that residential construction had the highest proportion of contracts awarded by value in July with 37% of the total – an increase of 7% on the month before.
It follows positive reports from a number of British housebuilders recently, with Bovis recording an increase in pre-tax profits of 57% compared to last year, and Bellway also announcing a record growth of 36% in forward sales.
The monthly report revealed that the value of all new construction contracts awarded in July totalled £5.1 billion - a slight decrease of 3.2% compared to June. However, construction levels were 6.2% higher than the value recorded in July last year, which economists suggest is further evidence of the industry’s improving performance over the long-term.
Michael Dall, lead economist at Barbour ABI, commented: “Once again, residential construction continues to dominate the industry, and it is not surprising to see housebuilders reporting record growth across profit, completions and average selling prices. This is not likely to change as long as the current economic conditions persist and demand remains strong.
“With output in the construction industry flat over the last quarter, mainly due to a very poor month in May, it’s encouraging to see residential construction sustaining the industry going forward. However, growth in other key sectors such as commercial and infrastructure will also need to improve if the industry is to surpass its pre-recession size sooner rather than later.”
London and the South East were the UK’s main areas for construction activity in July, each accounting for 15% of the UK total. This was largely down to a handful of large projects including the £100m contract for The Corniche, a residential development as part of the regeneration of Vauxhall Nine Elms on the South Bank, and the £150 million Smart Motorway project on the M3 in Surrey.