The UK economy is off the sick bed

The UK economy is off the sick bed and finally growing strongly. Althought the numbers are still being tripled checked, growth last year is around 3% (compared to 1.7% in 2013). 2014 was the first year in a few that construction felt like it had turned a corner.

In May 2015 we know there will be a general election, we just don’t know who will be in power afterwards but what else will happen this year?

·         The industry needs to counteract the workforce issues – this can come via two routes. First investment in training graduates is a key and all businesses should be seeking to achieve this whether for an individual or a few hundred. Every little helps. Secondly is reassessing how we approach a project, by using pre-fabrication more the number of labour hours should reduce;

·         BIM (Building Information Modelling) is something I was fortunate to witness in action this last week. BIM is changing how buildings, infrastructure and utilities are planned, designed, built and managed. Working for a large professional service firm, I think new approaches such as this which really added value to the customer are the future and will also bring greater efficiencies to projects;

·         Drones are being developed further and further and it will not be long before drones are used on construction sites, to monitor progress, health and safety or simply to take close up aerial shots. Whether 2015 if the year they become embedded is for time to tell but certainly I expect more use during the year;

·         The Government (who ever it may be) will need to shake up the industry to tackle the skills shortage. The acute skills required for certain  projects are becoming as scarce as UK coal mines but we still need them both!

The key priority for 2015 is the need to do more to bring young people into the industry through apprenticeships and training, and the housing crisis needs urgent resolution. The next government should stop playing political games and implement the recommendations of the Armitt Review and set up a National Infrastructure Commission.

It was nice to read this week that Henderson has decided against a sale of John Laing and instead will float the business. Although John Laing is no longer a builder, it plays a key part in raising money for projects, managing contractors and running assets.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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Optimism in construction – yes let’s be positive now

Well 2015 feels well and truly up and swinging and the one point that strikes me in the various meetings I’ve had over the last two weeks is positivity and optimism and why not as housing is rising on the political agenda, and the UK is well and truly building again. Just looking out of the office window earlier in the week and the view over two construction sites just made me smile.

Although in history, 2014 was a good year for housebuilding, with the highest number of new homes constructed since the recession hit in 2007, and I think 2015 will exceed it. In every area across the UK, builders are hard pushed to meet the demand in the area – noted more so with a development local to where I live which is truly in the worse location it could possibly be, yet fully sold of the plan! Across the country varying sizes are being constructed, with the £8bn Battersea Power Station project through to small regional developments with 10 houses.

The statistics highlight the positive change:

·         In 2014, 144,000 new homes with registered with the NHBC, a whopping 8% increase on the prior year;

·         NHBC highlights further that over the last two years there has been recovery across the country with strong growth in Yorkshire & Humberside (and too right, it’s a lovely place to live); and

·         300,000 is the estimated number of new houses needed a year (according to the Royal Town and Planning Institute).

The main issue that is present, and growing as the industry increases production, is the shortage of skilled workers and materials, mainly bricks. There is a focus on upskilling and a number of recent discussions are demostrating to me that the industry is really looking at how to retain and train existing, attract new and invest in the future through apprenticeships and other means.

Away from housebuilding, 2015 is also showing strong signs:

·         Manchester Airport Group have submitted plans to build the first part of the logistics hub at Airport City;

·         Harworth Estates acquired the former Skelton Power Station in Leeds for redevelopment; and

·         Wykeland continues to develop Beverley town centre.

I think it all sums up as good news across the region. Yes there are still empty buildings and hard times for some but the whole industry should focus on the good signs of stability and renewed investor interest.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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Flat or growth in the housing market – depends who you ask

A happy new year to you all. I hope you managed to spend some quality time with your family and friends. Seems a bit strange saying that as I already feel like 2015 has been going for a good month or so.

Well we ended 2014 on a bit of a low with house price growth pretty much grinding to a halt by the end of year and most predict this will continue in 2015. I am still optimistic for growth in 2015 in the regions as foreign investment moves outside the M25.

Nationwide shows that across the UK house prices were up 7.2 per cent over the whole of 2014, but in December prices rose by just 0.2 per cent on average. St Albans in Hertfordshire was the city with the strongest house price growth across 2014, with prices there rising faster than in London. The average house price in St Albans has jumped by 24 per cent over the year while the capital recorded a 17.8 per cent increase. St Albans – a commuters dream (or maybe not).

The general property economist would say that given price increases over the past few years that further growth is restricted. I would focus more on the nervousness given the looming general election. Think wider people, most house prices (particularly in the North) are still below pre-recession levels and there is always the following to put a smile on your face:

·    Both Hometrack and Savills predict price rises nationally of just 2 per cent in 2015 while Halifax and the RICS are both a little more optimistic, predicting rises of 3 per cent across the UK. Some are also saying Yorkshire will undergo the largest rises with 5 per cent. I think that is potentially a little too adventurous but somewhere in the middle around 4 per cent sounds good to me.

 

·    The election is likely to be a huge issue for all parties with some already waving their manifesto. Anyone remember that mansion tax? The Conservatives gave us all a positive shock by reforming stamp duty, which was good news for anyone buying a house less than £937,500 (so a lot of people).

·    So a mansion tax. The impact is difficult to say but the main focus will be on London, few homes up North are worth more than £2 million. Stamp duty was the real benefit. The stamp duty tax cuts on homes under £1 million could also improve demand for such homes this year. I say take advantage and make the move, particularly before interest rates rise – fix it now and enjoy some more space.

·    In 2014, we took advantage of the housing market to upsize and move further into the countryside and this is what a lot will do in 2015, mainly in the South with people cashing in on the capital’s huge price rises. With improved infrastructure, particularly trains, this may benefit the North with commuting times to the capital reducing and the cost of living being significantly cheaper.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy the weekend

Lee

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