Britain’s builders are the most confident since 2007 buoyed by Help to Buy scheme and growing optimism among construction firms, it emerged today.
The Chartered Institute of Purchasing & Supply’s latest snapshot of the sector revealed sentiment at its most upbeat since January 2007, with housebuilders driving the industry forward in March as activity recovered from floods and heavy rainfall the previous month.
The rise in residential building was one of the fastest for a decade and offers encouraging signs of builders stepping up to match increased demand spurred by Help to Buy.
The Government’s scheme has been running for a year to get would-be purchasers onto the property ladder and was recently extended to 2020 by the Chancellor in the Budget. Building society Nationwide today reported average house prices up a staggering 9.5 per cent on last year and the market running twice that rate in London.
Cips chief executive David Noble said: “Confidence in construction is soaring thanks to the Budget boost and dissipating impact of the floods in a ringing endorsement the recovery will continue. As the rain gave way to sun, the housing market reclaimed its spot as the star performer.”
The demand is such that builders are hiring at a rate scarcely seen since August 2007, pushing up salaries sharply as the industry hunts for labour after years in the doldrums. Average pay jumped 5.6 per cent in the year to January, according to the Office for National Statistics, with big housebuilding firms reporting that bricklayers were able to command salaries of £50,000 a year.
The rush to build is putting a strain on supply chains as construction firms are forced to wait longer for raw materials. The Cips survey also revealed the availability of subcontractors had fallen at its fastest pace for 14 years — the “fly in the ointment” according to survey compiler Markit.
Berenberg chief economist Rob Wood said: “The one problem for construction is increasing signs of capacity constraints. Delivery times for raw materials increased by an almost record amount, as surging building activity put pressure on suppliers. Wage gains are unlikely to slow much while the sector booms.”
New business orders grew at their slowest pace for six months across the construction industry overall, but the sector, which accounts for around 6 per cent of the UK’s economy has expanded for 11 months in a row, Cips said.