London accounted for 17.5% of the total UK residential construction spend
Residential construction accounted for more than a third, by value, of all UK contracts awarded in February, according to an analysis by Barbour ABI.
Its data confirm what we already know from recent trading updates from several leading house-builders. House-building is back with a bang. Bovis and Taylor Wimpey both posted full-year profit increases of 39%, Persimmon is up 49% and Barratt has reported a 162% increase in profit for the six months to the end of December 2013.
The revival in the market is attributed in part to the government’s Help to Buy equity loan scheme, which the chancellor this week revealed is being extended to 2020. Barratt said that it expected to create an additional 3,000 jobs because of that. Across the industry, it could be as many as 180,000.
Stewart Baseley, executive chairman of the Home Builders Federation, said: “The Help to Buy equity loan scheme is driving demand for new homes and so allowing builders to increase the numbers of homes they build. If people can buy, builders can build. The scheme is providing certainty for the industry, allowing companies large and small to take on the builders and apprentices needed to construct the homes the country needs. HBF estimates that 120,000 homes would create 180,000 jobs directly in home building, and around 300,000 in total including the supply chain.”
Michael Dall, lead economist at Barbour ABI, commented: “As expected, the residential construction sector experienced year-on-year growth for a third consecutive month in February. Importantly, the number of units associated with residential contracts awarded increased by 1.8% on January and were 51.5% higher than February 2013, confirming the scale of the upturn in the market over the last year.
“It’s clear that stimulus packages such as Help to Buy are having a significant and sustained impact on house building, with strong evidence of increased profits across the industry. The chancellor’s commitment to providing a further £500m of finance to small house builders, as well as £150m to help people build their own homes, will also be widely welcomed by the construction industry.
“However, there are still concerns that these prolonged initiatives will drive up house prices and make homes in some places, particularly London, unaffordable for first-time buyers looking to get onto the property ladder.”
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