Prospects for construction over the next three years remain good, although consumer confidence took a knock in November, according to pollster Martin Hamblin GfK. More people judge it to be a bad time to make a big purchase, as perceptions of the outlook for the economy falter and the rise in the cost of borrowing takes hold.

Nonetheless, there was a record demand for mortgage lending leading up to the hike in interest rates. The British Bankers’ Association says 270,500 loans for property were approved in October, up 10% on the same month last year.

Another indicator of the house market’s health comes from the Royal Institution of Chartered Surveyors. It says the balance of its members reporting higher prices increased to 38% in the three months to October, compared with 31% in September.

Government estimates of construction output in the year to the second quarter of 2003 indicate a rise of 6%. Output of new work was up 7%, and was 3% higher than in the first quarter. Repair and maintenance rose by 5% at the annual rate and by 8% compared with the first quarter.

Private housing

New private housing output rose by 17% in the year to the second quarter, while public sector housing output increased by 10%. Output of infrastructure work dropped 5% compared with a year earlier, and private sector industrial work fell 6%, but commercial projects rose by 5%. The largest boost was from other public sector work, which rose 23% above the second quarter of 2002.

Housing repair and maintenance in the public sector fell 2% annually in the latest quarter, but rose 12% in the private sector. Work on private non-housing buildings rose 6%.

The latest official figures on housebuilding show that starts during the third quarter in England were up 2% on a year before, continuing the gradual upward trend since 2002. Starts in Yorkshire and the Humber, the East Midlands and West Midlands have seen a recent upward trend, but in the north-west and north-east trends have been flat.

Timber framed housing enjoyed mixed fortunes in the third quarter, according to the National House-Building Council. It shows that 13% of all new homes registered with the Council in Great Britain during the quarter used timber frame – down from 14% in the second quarter – while the percentage in Northern Ireland rose from 4% to 6%. The largest fall in market share was recorded in Scotland, with a drop from 72% in the second quarter to 61% in the third.

The volume of new construction work in the pipeline is down sharply, say official statisticians. Orders for new construction work placed with contractors in the third quarter of 2003 were 17% lower than a year earlier. Private housing orders fell by 13%, although public housing orders rose by 15%. Orders for infrastructure projects dropped by 44% while other public work was up 14% compared with the third quarter of last year. New contracts for commercial and industrial construction fell 24% and 3% respectively.

On the material supply side, combined domestic and export sales by UK manufacturers of builders’ carpentry and joinery slumped by 14% between the third quarters of 2002 and 2003, but kitchen furniture sales increased 6%.

UK exports

UK exports of builders’ carpentry and joinery rose in value by nearly 11% year-on-year in the second quarter, as imports increased by nearly 12%. Shipments of windows and window frames rose 13% over the year and door exports were up 6%. Imports of windows and doors rose by 28% and 7% respectively. UK exports of prefabricated buildings improved by 29% between the second quarters of this year and last year, but imports soared in value by 84%.

The outlook for construction as a whole is bright, according to Experian Business Strategies. Total output is expected to rise by 4% this year and by 3% in both 2004 and 2005. Public non-housing work is set to be the most buoyant sector, but housing and infrastructure projects are also expected to see strong activity.