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Strong start for construction in 2017 as housebuilding flourishes

The construction industry has started 2017 strongly, with an increase in activity levels as the value of new building contracts awarded in January reached £6 billion, spearheaded by strong figures from the housebuilding sector.

According to the latest edition of the Economic & Construction Market Review from industry analysts Barbour ABI, housing figures increased sharply across January, with construction contract value reaching £2.7 billion, a massive 83 per cent increase compared with January 2016.

Housebuilding

Of all the type of projects across housebuilding, it was private housing that dominated in January, with 91 per cent of the total construction contract value in January, compared to just 66 per cent a year ago. Market conditions for private housing were also favourable for housebuilders in 2016, with Crest Nicholson recently reporting a 27 per cent increase in full year profits.
There are also currently £5.8 billion worth of housebuilding contracts that are nearing award status, suggesting this month’s growth is likely to continue over the next few months and beyond.

London unsurprisingly led all regions based on total construction contract value in January, accounting for 26 per cent. This was helped greatly by the £900 million One Nine Elms Twin Towers development, the largest project recorded on the month.

Commenting on the figures, Michael Dall, lead economist at Barbour ABI, said: “Whilst the housebuilding sector is performing admirably, we expect to see its growth continue to flourish across 2017. However, other sectors now need to start producing more auspicious figures, such as the commercial & retail sector, which saw a year-on-year decrease of 40 per cent last month. Infrastructure, another traditionally big performing sector, is also in a slump with January figures being the lowest for 12 months.”

“On the positive side, the number of projects awarded in January jumped by 50 per cent compared with December and 25 per cent when looking at January last year. These figures are encouraging and would suggest that work is most certainly on the way.”

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No sign of a Brexit impact on construction in June with £6.2 billion worth of contracts awarded

After an eventful final week of June with a series of shocks sent through the economy, the construction sector managed to hold strong, with new orders reaching £6.2 billion on the month, the highest figure of any month so far in 2016.

According to the June edition of the Economic & Construction Market Review from industry analysts Barbour ABI, the two stalwarts of the construction sector; residential & infrastructure, both had year on year rises in June, with contract values increasing by 26 per cent and 14 per cent respectively.

London regained the top spot for construction contract value by location back from Scotland after it held the position over the last two months, mainly due to a number of major renewable energy projects. London’s construction boost this month was helped greatly by the award to develop the Bechtel House Hammersmith valued at £275 million and the first phase of the £100 million Royal Albert Dock project. Both these major schemes help propel office construction to a total of £650 million worth of contracts awarded on the month, contributing to 81 per cent of all commercial and retail construction value.

Commenting on the figures, Michael Dall, lead economist at Barbour ABI, said: “With the majority of the sector under the assumption that the UK would not vote to leave the European Union the result left many surprised, and our June figures are under the assumption that it would be ‘business as usual’.”

“We have seen housebuilder stocks fall in the wake of the vote and anecdotal evidence that projects are being cancelled. However, that is not evident in the data as of yet and it is a case of wait and see in terms of the impact Brexit may have.”

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