Finally, a happy new year

By Noble Francis2014-01-23T09:29:00+00:00

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December’s CPA/Barbour ABI index shows a slight dip, but it’s up on this time last year and the public sectors look positive

Noble Francis

It was unsurprising to see a dip in December’s CPA/Barbour ABI contract award index, to 113, given that the construction industry shuts down over Christmas and New Year. However, it was still 2% higher than a year ago and supports the view that, overall, 2013 was better for the industry than 2012 despite the poor weather 12 months ago.

Most heartening in the December indices was growth in the public sectors: housing, education and health. Admittedly, this is coming from historic lows so I wouldn’t get too excited, but the growth compared with a year ago is still good news. The Affordable Homes programme is currently boosting social housing; new academies and work on university campuses are raising workloads in the education sector; and large hospital projects such as the Royal Liverpool hospital will also provide activity in
health as government capital spending begins to rise.

An upward spiral

The success story of 2013 was the recovery in private housing. Starts in 2013 are anticipated to be 24% higher than a year earlier despite a poor Q1. Furthermore, the latest CPA/Barbour ABI data points towards double-digit growth in private housing during 2014.
The contracts index for private housing in December was 4% higher than in November and 13% higher a year earlier; this should feed through onto the ground in 2014.

It is clear that wider economic activity and Help to Buy have boosted demand, especially in key areas such as London, where there is a chronic undersupply and where prices are rising quickest. The Office for National Statistics reported that prices in London were 12% higher than a year ago and 25% higher than at the pre-recession peak.

All the major housebuilders have said they are keen to take advantage of Help to Buy while it is in place and although it is scheduled to finish in March 2016, at the rate it is being taken up it will end in 2015. The key question is whether we still see housebuilding growth when Help to Buy ends, even with stronger economic growth.