House building continues to fuel construction growth

Figures from the Office for National Statistics show steady growth for the construction industry with output rising 4.1 per cent over the year to Q3 2013.

Much of the growth continues to be fuelled by house building – private house building increased by 15.6 per cent in the same period. This rise in activity is assisted by the Help to Buy scheme which allows homebuyers to purchase a new home with only a five per cent deposit.

Julia Evans, chief executive of the National Federation of Builders, said:

“Help to Buy has given a much needed shot in the arm to the house building sector. Activity is increasing, but we started from a low base. We are still building around 40 per cent fewer homes than we were building in 2008; nowhere near enough to meet demand. We need to ensure that the industry is on a sustainable footing before the three-year Help to Buy scheme ends so we don’t see that level of decline again.”

Output in the repair and maintenance sector fell by 0.6 per cent. While output in this area has fallen, it has remained fairly steady. The Energy Companies Obligation (ECO) continues to generate a significant amount of retrofit work with almost 50,000 installations in August. This is in contrast to the Green Deal which is struggling to catch the public’s imagination. Cutting funding for ECO would further depress activity in this sector, reducing available work at a time of rising costs.

Julia Evans continued:

“Behind the good news of increases in construction output is the spectre of rising prices. The cost of doing business continues to rise as materials and labour cost increases far outpace increases in revenue. Shortages of materials such as bricks not only push up prices but make it difficult to meet demand.”