As summer starts in earnest, there are signs that the industry may be slowly emerging from the toughest period in recent history. Evidence from surveys, trade associations and consultants suggests the economic climate could be improving
New building work is on the increase, according to accountant and business adviser BDO Stoy Hayward, whose first ever Commercial Real Estate Review found that contractors and developers completed around 9,000 commercial transactions valued above £40,000 in March, the highest number since October last year.
‘People are talking about opening up more sites and doing more building – the south east is moving faster than other parts of the country – although they are wary that margins are a bit tight and it’s still a buyer’s market,’ said Solly Benaim, head of real estate and construction at the firm.
‘Developers are now looking at what demand will be like in three to four years’ time and the belief is demand will be much higher by then so more money will be made available for construction over next six to 12 months,’ added Benaim.
Signs that the housing sector may be experiencing ‘green shoots’ were revealed in the latest Royal Institute of Chartered Surveyors’ (RICS) housing market survey, which found the number of surveyors reporting a rise in new enquiries rose for the seventh consecutive month in May. A total of 40% of surveyors said they expected sales levels to increase, the highest percentage in the survey’s 11-year history.
‘There has definitely been a shift in sentiment. Since November we have seen a gradual increase in surveyors reporting new buyer enquiries,’ said Brigid O’Leary, senior economist at RICS. ‘The increase in the number of sales per surveyor is promising when people are having problems with mortgage finance. Looking forward we expect things to continue to improve but at a rate moderated by weak economic growth.’
A survey of construction SMEs carried out by insurance group QBE in May found that 65% were predicting stable or increasing sales turnover in the next six months, up from the 47% that expressed optimism at the end of last year.
And while more than four in five building SMEs said the last six months were the worst they had ever experienced, 59% said they were now better placed to make the most of an upturn than a year ago, while 53% reported that they now run a more competitive business than before the recession.
In another positive sign, calls to redundancy advice lines run by the Federation of Master Builders (FMB) and the National Federation of Builders (NFB) fell to the lowest point this year in April.
The NFB said 89 job-cut related calls were made to its helplines in April, about half of March’s total of 167, while the FMB reported a 40% decline in the number of members seeking advice on redundancy since January.