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House building slows in December but growth positive

by: Samantha Partington
  • 06/01/2015
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House building slows in December but growth positive
House building propped up the construction sector's rate of growth in December despite expanding at its slowest rate since June 2013.

Figures from the the Markit/CIPS UK Construction Purchasing Managers’ Index revealed that while the rate of output across the industry had increased in December, the index had falled from 59.4 in November to 57.6 in December.

This signalled the smallest increase in growth since July 2013. A reading above the 50 mark of the index separates the expansion of a sector from its contraction.

“What we we’ve seen is a levelling off of house building at a higher rate of activity that we were at 12 to 18-months ago, said Steve Turner, head of communications at the Home Builders Federation.

“It would be hard to maintain the rate of growth seen last year when steep rises in house building were driven by the launch of the Help to Buy scheme. It’s still very positive that the overall rate of house building is now at a higher level than it was 12-months ago.”

As house builders began to release their financial statements last year the seismic impact of the Help to Buy equity loan scheme, exclusively available for new build homes, on profits, sales and order books became clear.

National housing developer Redrow, reported a record 91% profit increase for the year ended 30 June 2014 – the highest profit increase in the company’s 40-year history.

Chairman Steve Morgan said that while the profit surge was clear evidence of the success of its strategy, it also highlighted the positive effect of the government’s Help to Buy scheme.

Redrow revealed an 85% uplift in its order book to £482m which it said indicated another year of ‘significant’ progress.

Taylor Wimpey reported it completed around 40% of its private homes through the Help to Buy scheme in the second half of 2014. But in a statement, the company said it welcomed the calming measures of the Mortgage Market Review and the Bank of England, which it said reduced the risk of the market overheating and increased its long-term health. 

A skills shortage was reported across the sector which Turner said was understandable considering the number of workers who exited the industry in 2008.

But he added that residential construction companies were working hard to put this right.

“What we’ve seen in recent months is a big recruitment drive with many firms offering apprenticeships although it takes time to rebuild a skilled workforce and train up new people, but we have started to see this filter through.”

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