Construction Output Trending Downwards While New Home Building Remains Steady
Output in the construction sector contracted by .8% in Q3, reported the Office of National Statistics.
This decrease in output was driven by decreases in both repairs and maintenance producing a .6% and .9% drop in these respective construction areas.
On a positive note, overall construction output increased by .6% month on month 2017. The OBS said this was mainly due to a 1.7 per cent increase in new starts, made up by a 2.3% increase in private housing and a 3.6% increase in housing infrastructure expenditure.
Analysts however, cast a gloomier spin on the figures. Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics commented: “August’s month-to-month increase in construction output should not distract from its underlying downward trend.”
Tombs explained: “The 7.8% quarter-on-quarter fall in the official measure of construction orders in the second quarter shows that the near-term outlook is bleak.” Although he did acknowledge that, “housebuilding has held up well in recent months and that construction in the private industrial sector has begun to recover.”
The mortgage broker’s viewpoint
Craig Hall, new build manager at Legal & General, which runs the largest mortgage club for brokers in the UK, said of demand for mortgages for new build residential properties: “The mortgage market is very much open for business. There are currently 20 lenders supporting the Help to Buy equity loan scheme and I’m in discussion with a further four to five lenders intending to join the scheme.”
“There is plenty of desire and appetite from lenders to support the new build market, particularly as lack of existing stock plus challenges with raising a deposit means more first time buyers are looking at new build and utilising the Help to Buy scheme,” he added.
Sean Reilly, new homes specialist at Mortgage ID in Cardiff outlined: “First time and next time demand for new builds has never been higher because of the Help to Buy Scheme. As long as Government support for the Scheme continues, I don’t see this changing. The November budget will be key for home builders as it is vital that they remain confident so construction of new affordable homes continues.”
Chris Menon Mortgage Solutions with contributions from Greg Oxenham Mortgage ID