Housebuilding in the UK has grown at its fastest rate in over a decade, undergoing a constructional renaissance, a result of exponentially growing demand, which has seen employment levels rise considerably.
Although employment levels have increased in line with demand for new houses, as has the cost of construction. Contractors have capitalised on the current economic climate, making the most of increased levels of demand by swelling their prices. This financial strain has been exacerbated by the increased cost of fundamental building materials, most notably a deficiency in bricks.
According to a survey from Markit, financial service provider, construction as a whole grew for the 15th month in a row, with the bulk of this expansion rooted in a steep increase in the amount of residential house-building.
Growing at its quickest tempo since November 2003, the record high levels of residential house-building could be indicative of government seeking to take some heat out of the housing market, taking baby steps towards more affordable housing.
Markitís findings come days after the shadow housing minister, Emma Reynoldsí, claimed that the Coalition government ìhave presided over the lowest levels of house-building since the 1920sî. However the latest figures render such a claim farcical, as the Coalition government brushes off what appears to be some petty snow throwing on the part of the opposition.
The hiring rate was at its fastest since 1997 due to the sheer amount of work that required completion, with a further boost being companies offering permanent jobs out to combat potential future demand within the housing sector.
There is an underlying sense of optimism regarding the housing sectorís future, with its ubiquitous volatility put on the back burner for the time being, as prospective first-time house-buyers across the country cross their fingers for a downward swing in house prices.
Tim Moore, senior economist at Markit, said: ìJulyís figures suggest the UK construction sector is enjoying its strongest cyclical upswing since the global financial crisis, while a new record rise in employment highlights that construction firms are increasingly confident about the sustainability of the upturn.î
Nuts and Bolts of Markit Findings
Although the scale of activity, determined by Markitís purchasing manager index (PMI) reading, stood at 62.4 for July – 0.2 down from the previous monthís reading, activity remained above the 50-mark target which separates growth from reduction, and also exceeded economistsí expectations of 62, as calculated by a Reutersí poll.
Markit also noted a marked increase in all three sub-divisions, with residential construction, commercial construction and the civil engineering sector all recording greater levels of activity.
Markitís discoveries provide fresh optimism that constructional activity is on an upwards climb, following a decline earlier in the year because of stunting levels of private house-building and low levels of sub-contracting.
Sub-contracting has been the fashionable mode of construction in recent times, however fears regarding the waning quality of sub-contractors as a whole has negatively impacted supply in recent times. Increased levels of permanent employment within companies has gone some way to addressing the problem of employment, a viewpoint endorsed by David Noble, CEO of the Chartered Institute of Purchasing & Supply.
Mr. Noble said: ìOne concern is the strain on supply chains that could become a roadblock to sustained growth in the future.”
“But thereís evidence that firms are starting to look beyond in-demand sub-contractors and instead further boost their own staffing levels, which goes someway to explaining the record rise in employment levels,î he added.
The Coalition government moved to rubbish fears over the state of the housing sector, using Markitís survey as being representative of house-building being back on the right track. The Tories were quick to point to the success of their flagship Help to Buy scheme, which they claimed was remedying the ìloss of a quarter of a million construction jobsî under the previous Labour government.
“Through the Help to Buy scheme almost 40,000 households have now achieved their dream of becoming homeowners and helped housebuilding increase to its highest level since 2007,” said housing minister Brandon Lewis.