Recent reports suggest that UK construction remains in “rude health”, writes Sahel Majali.
The UK’s property market continues to provide developers with new construction up and down the UK, according to the Office of National Statistics (ONS).
UK house prices grew by 6.1% year-on-year for September, a 0.6% rise on the previous month. According to a recent study from Nationwide, doesn’t have enough residential property; supply is now lower than it’s been since the 1970s.
This high demand low supply ratio also characterises the UK’s commercial property market. The chief economist at the Royal Institute of Chartered Surveyors (RICS), Simon Rubinson, explained: “We’re seeing a solid increase in demand for commercial properties across retail, office and industrial sectors. In other words, at the moment, however badly rental costs might pinch, they do not appear a barrier to growth.”
With weak supply volumes and a high demand for property, the UK construction industry has steadily grown over the past few months. The Telegraph reported that the Markit/CIPS Construction Purchasing Managers Index (PMI) slipped from 59.9 points in September 2015 to 58.8 in October, with anything above 50 indicating growth.
Confidence in the UK construction industry
Tim Moore, senior economist at Markit, explained that a bounce in new orders and the fastest pace of job creation for nearly a year “highlighted another upturn in overall UK construction output.”
Meanwhile Markit added that UK construction firms were “highly upbeat” about their growth prospects over the coming year.
Overall, over half of the participants believe they will see a rise in growth for the construction industry in the next 12 months, whilst just 7% believe it will decrease. Construction firms may believe that they’ll keep growing because they provide vital services that support UK property sector activity, which experts predict will expand to new heights next year.
Rising house prices
Research from international real estate firm Knight Frank predicted that average UK house prices will increase by 4.1% by the end of 2016. A market survey from RICS also predicted that UK commercial rental values will rise 4% over the same period of time.
That means that developers who decide to initiate new construction projects in 2016 may see a significant return on their investment as the construction industry continues to look strong.
Mid Contracting UK has extensive experience across the UK construction industry. We have delivered a wide range of projects, including the Aynhoe Park Estate residential development in Aynho, Oxfordshire. We have the market expertise, skilled professionals and industry connections developers require to capitalise on the UK’s robust property market as we head into 2016.