After a tough year, it is welcome news to learn that housebuilding contributed to the growth of the country’s construction sector, for the month of December. We take a closer look at the figures…
Once the lockdown restrictions were eased and the government announced the Stamp Duty cuts on property purchases, there was a surge in buying activity, and property prices went up. This boosted builders’ confidence in the second half of the year, which led to housing being the biggest driver behind construction growth.
Looking at December specifically, the IHS Markit/CIPS construction Purchasing Managers’ Index (PMI) fell slightly to 54.6 from 54.7 in November. However, the encouraging signs to take from this is that the index was still above the 50-mark which separates growth from contraction.
What does it mean for the construction sector?
Well, for the first time in nearly two years, the sustained improvement has resulted in an increase in employment in the sector. Healthy construction order books have also led to optimistic growth forecasts, the likes of which haven’t been seen since 2017. This is all very positive when you consider the wider economy of the country is doing less well, following a four-week lockdown in November. Plus of course, we’re yet to see what effect the New Year lockdown measures will have on the economy, although there’s no doubt they will likely impact it further.
Record figures for new homes
Back in December, we saw data which showed the number of homes delivered in 2019/20 was the highest in three decades. The figures which came from the Ministry of Housing, Communities & Local Government showed that 243,770 homes were delivered in 2019/20. This amount is in fact the highest number of homes delivered in a year since as far back as 1987. Another positive statistic is that 2019/20 was the seventh year in a row that the number of new homes delivered has increased. Taking this into account, it is clear that housebuilding will play an important role in the country’s recovery from the Covid-19 pandemic.
News from the developers
And the positive news is starting to filter through from the developers themselves as they publish their half-year performance figures. Barratt Developments for example have reported an ‘excellent first half performance’ with home completions up 9.2% to 9,077 homes compared to the same period in 2019. Despite operating from a reduced number of outlets (8.1% down on 2019) due to the first national lockdown delaying site starts, Barratt managed to launch 63 new outlets. This was above expectations when you consider in 2019 only 45 new outlets were launched.
Fewer completions are expected for the second half of the year, as a reduced level of work is carried forward from a strong first half. Barratt Developments also remains ‘mindful’ of the economic impact of factors such as Covid-19 and Brexit, as much as the changes to the Help to Buy scheme and the Stamp Duty holiday.
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