Signs of recovery for UK market

02 September 2013

There are signs of improvement in the UK construction market after separate sets of data from the industry suggested that tender prices have bottomed out while house building levels have continued to improve.

According to data from the Building Cost Information Service (BICS), part of the UK Royal Institution of Chartered Surveyors (RICS), tender prices fell 1.7% in the first quarter of the year.

BICS said this suggested that the significant rise in tender prices in the fourth quarter of 2012 was indicative of a bottoming out of the market.

BICS also said the total volume of construction orders remained unchanged year-on-year in the first quarter, but fell 10% compared with the fourth quarter of 2012. In addition, total construction output was down 2% compared to the fourth quarter of last year, and down 6% year-on-year.

Peter Rumble, BCIS information services manager, said, “The latest data suggests tender prices have bottomed out and are expected to rise slowly over the first year of the forecast period, slightly ahead of building costs. As demand improves towards the end of the forecast period in 2018, tender prices are expected to rise more steeply, as contractors in an improving market try to recoup some of the losses incurred over the recessionary years.”

Mr Rumble forecast a return to modest growth in output from 2014, with the recovery gathering momentum over subsequent years.

“Strong growth is expected in the infrastructure sector, over the forecast period, with the government investing £70 billion (€82.5 billion) into infrastructure projects between 2015 and 2021. The initial recovery will also be driven by the private housing sector partly as a result of various government initiatives designed to boost the housing market,” said Mr Rumble.


These comments came as statistics from the UK NHBC (National House-Building Council) showed that house-building levels for July were 19% higher (13,539) than the same month last year (11,391).

Taking the rolling quarter into account (May to July 2013) the period reveals a 30% increase compared to the same period last year, with 37,738 new homes registered.

NHBC Commercial Director Richard Tamayo said, “July was a bumper month for new home registrations, particularly for the private sector.

“This recovery is from a relatively low base but nevertheless reveals that builders are beginning to meet the growing demand to provide the new homes that the country desperately needs. Looking ahead we hope that the rest of the year continues this long overdue recovery story.”

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