New orders in private housing surges in October

December 8, 2017 / Isla MacFarlane
New orders in private housing surges in October

Construction output contracted for the sixth consecutive period in the three-month on three-month time series, falling by 1.4% in October 2017; however, it remains at a relatively high level. Housing new orders grew in Q3, increasing by 9.5%, recovering from a fall of 4.2% in the previous quarter.

Neil Knight, business development director, Spicerhaart Part Exchange and Assisted Move, said, “Taken in isolation the headline figure for construction output from the ONS this morning don’t make for good reading. However, when you drill down into the finer detail we see encouraging signs when it comes to new housing in both the public and private sectors.”

Construction output peaked in January 2017, reaching a level that was 29% higher than the lowest point of the last five years, January 2013. Despite falling in October 2017, construction output remains 23.6% above this level.

Construction output fell by £553 million in October 2017. The majority of industries were broadly flat in October 2017, with only private industrial work and housing providing notable positive contributions to growth. Private industrial work increased by £82 million in October 2017, while growth in housing came as a result of increases in both public and private housing, which grew by £43 million and £35 million respectively.

Total all work decreased to £12,417 million in October 2017. This fall stems from decreases in both total all new work, which contracted to £8,087 million and total repair and maintenance, which fell to £4,330 million.

In contrast, some positive month-on-year growth can be seen in new housing. Despite falling sharply in the month-on-month series, housing remains strong month-on-year, with public housing work increasing 14.2% and private housing work expanding 2.7%. Meanwhile infrastructure continued the month-on-year growth seen throughout the majority of 2017, expanding by 5.7%.

New orders grew to its highest value since Quarter 4 (October to December) 2007, reaching £16,699 million in Quarter 3 2017.

Both public and private housing increased, expanding by 35.4% and 6.4% respectively. Following a sharp decline in Quarter 2 2017, private commercial also expanded, increasing by 1.0%. The only quarter-on-quarter decline within new orders came from public other work, which fell 0.5%.

“When you consider the amount of land that currently has planning permission, but is not being built upon, the budget announcement should mean a shift in this area as developers are forced to build rather than hold onto land in order to reap higher rewards,” said Knight. “When we heard that there are currently 270,000 homes with planning permission waiting to be built in London alone, we have to wonder how many that equates to over the whole of the UK.  For the prime minister to deliver on her promise of making the housing market a personal mission these new rules need to come into force sooner rather than later.

“At a time when new housing is so desperately needed we are seeing small increases but perhaps, if everything we’re being promised comes to fruition, 2018 will take us into a new landscape of increased building across the country.”

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