The CPA/Barbour ABI Index for October is a clear sign that things are looking up

Noble Francis

At 127, the CPA/Barbour ABI Index in October highlights further growth for the industry and suggests that output over the next year will grow considerably as the industry seeks to recover from its worst recession in over 35 years.

October’s contract awards were 7% higher than in September and 13% higher than a year ago.

Looking back to the summer, it was difficult to be confident about the sustainability of recovery as the growth was from a weather-affected first quarter. However, the October index is a clear sign that things are looking up.

Obviously it depends which sector and which region you are operating in, but the indications from the indices are that there is growth in private housing, public housing, education, offices and factories.

Although the key demand is in London and the South-east, construction appears to be picking up in other parts of the country, albeit from a low base.

The Help to Buy boost

Private housing contract awards rose 6% compared with September and were 39% higher than a year earlier. It’s no surprise that private housing has been the key driver of construction growth. It is coming from historically low levels, with housebuilding still less than half that needed to meet the number of households created each year. In addition, the government’s policies have primarily been aimed at the housing market. The controversial Help to Buy, in conjunction with Funding for Lending, has triggered demand and housebuilders are keen to take advantage of this rise while it is around.

Funding for Lending finishes in 2015 and although Help to Buy technically finishes in 2016, it is likely that the finance for it will finish in 2015. This also happens to be election year, so post-2015 there is a lot of uncertainty about what will happen in the housing market.
However, until then, housing demand and housebuilding should be sustained by these policies and the rise in contract awards is expected to feed through into private housebuilding growth of 19% in 2013 and a further 15% in 2014.

Click here to see all the CPA/Barbour ABI Index data

barometer nov 13