Thursday, 18 August 2016

UK Construction Market Update - July

The ONS have released their Construction output in Great Britain: June 2016 and April to June 2016. Output was estimated to have decreased by 0.7% in Q2 2016 when compared to Q1 2016, with all new work decreasing by 0.8% and all repair and maintenance decreasing by 0.5%. In June 2016, output decreased by 0.9% when compared with May 2016.

The Markit/CIPS UK Construction PMI shows construction output falling in July 2016 making this the fastest overall fall in output since June 2009. However new order volumes fell at a slower pace than the three and a half year low seen in June 2016. Anecdotal evidence suggested that economic uncertainty following the EU referendum was the main factor weighing on business activity in July 2016.

UK Construction PMI - July: 45.9
Globally Timemetric’s Construction Risk Index shows construction risk has increased for Q2 2016. The unweighted global average score for risk rose to 41.68 from 41.12 in Q1 2016, making this the highest level of risk in the 11 quarters since the index was established

The NHBC have reported that 41,222 new homes were registered in Q2 2016 throughout the UK, with 31,753 of these new homes being registered in the private sector, a 6% increase from 30,086 a year ago. Overall, this represents a 1% increase compared to the same period last year when 40,931 new homes were registered, making this the strongest quarter since 2007.

The ONS House Price Index reports that house prices increased by 8.7% in the year to June 2016, which is up 0.2% on the year to May 2016, representing the continuing strong growth seen since the end of 2013. Yet the latest RICS Residential Market Survey shows that house price growth slowed during July 2016, with key indicators of price expectations remaining negative. Sales and enquiries also dropped again in July, however expectations point to a more stable picture in the coming months.

The Nationwide House Price Index reports that in July 2016 house prices increased by 0.5%, with annual house price growth increasing very slightly to 5.2%, however any impact from the EU referendum may not be fully evident yet in these figures due to Nationwide using mortgage offer data in their index calculations. The Halifax House Price Index reports that in July 2016 house prices decreased by 1.0%, and in the last 3 months (May – July) were 1.6% higher than the preceding 3 months. They also report that prices were 8.4% higher in the 3 months to July than the same period in 2015.

Source: Competitive Advantage Consultancy Ltd