‘A period of stagnation in the currently overblown housing market seems likely.’ So say analysts at Cambridge Economet-rics, adding that the expected slowdown over the coming year will most likely start in London.
Faced with the possibility of a downturn in the short term and the need to improve profitability in the longer term, restructuring of the housebuilding industry continues. August saw the third large takeover in the past eight months with an agreement by Alfred McAlpine to sell its housebuilding arm to George Wimpey for £461m. Earlier this year Persimmon bought Beazer for £560m and Taylor Woodrow acquired Bryant for £535m.
The Wimpey deal will see the new organisation building about 12,500 homes in 2002, down from the combined figure of 13,900 last year.
Meanwhile, official figures indicate that the volume of orders placed with UK contractors for new housing in the second quarter was down by 4% compared with the same period a year ago. Orders for public housing rose by 36%, albeit this sector accounts for only about 15% of total housebuilding. Orders for private housing in the year to the second quarter were down by 10%.
Orders for commercial projects fell 20% in the year to the second quarter but those for industrial buildings improved by 2%. Infrastructure orders in the second quarter were 22% lower than a year before, following high levels of orders in the early months of 2001. In total, new construction orders fell by 12% between the second quarters of 2000 and 2001.
Work started on an officially estimated 44,500 new homes in the second quarter – a 1% reduction on a year earlier, although private sector starts were up 1%.
The National House-Building Council reports that in Great Britain 10% of new homes registered with it during the second quarter were timber frame – the same proportion as in the previous two quarters. In Northern Ireland 2% of registered homes were timber frame (compared with none in the first quarter), and in Scotland the proportion increased to 52%, from 43% in the first quarter. Five per cent of homes in England were timber frame in the first quarter, but this rose to 6% in the second quarter.
The latest snap-shot of conditions in UK construction, provided by BuildOnline and the Chartered Institute of Purchasing and Supply, shows that construction overall continued to expand strongly into the third quarter .
All sectors recorded growth during July, but the sharpest increase was in housebuilding. Commercial projects expanded for the 31st consecutive month and the rate of growth accelerated for the third month in a row. In contrast, activity in the civil engineering sector eased slightly from June’s 10-month high.
The evidence is that the amount of new business placed with British construction firms increased strongly in July, with the rate of growth similar to that in June.
On the supply side, delivery times for construction materials and products lengthened for the 28th consecutive month in July. The index of material prices signaled a further sharp rise – at a faster rate than in June – as higher prices appeared to be linked to strong demand and some raw materials shortages.
Official figures indicate that UK output of builders’ carpentry products for home and export customers rose by 2% in the second quarter and by over 3% compared with the second quarter of last year.
Imports of builders’ carpentry and joinery, including cellular wood panels and parquet panels, increased in value during the year to the second quarter of 2001 by 8%, to £67.6m, as exports shrank by 9%, to £11.6m. Exports of prefabricated buildings plunged 24%, but there was only a 5% decline in imports.
Related Files
Timber frame housing
UK production
Construction activity & orders
