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UK construction output growth surges to two decade high

UK construction output growth reached its highest level for over two decades, according to a closely watched business survey released today.

The latest IHS Markit/CIPS UK construction PMI for June was 66.3, up from 64.2 in May, the strongest rate of output growth for exactly 24 years.

Sharp rises in business activity across the three main sectors of the construction industry drove the over two-decade high expansion.

Housebuilding was the strongest sector, reaching 68.2 in June, the fastest pace of growth since November 2003.

Strong demand in the UK housing market and record price rises is likely to have prompted housebuilders to begin new projects.

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Commercial work recorded a reading of 66.9, notching another long-term high – output growth was the strongest since March 1998.

Civil engineering activity rose sharply in June (60.7), but the speed of growth eased to a three-month low.

Total new orders across the construction industry have now increased for 13 successive months, although the latest expansion was slower than May’s survey-record high.

Tim Moore, economics director at IHS Markit, says: “June data signalled another rapid increase in UK construction output as housing, commercial and civil engineering activity all expanded at a brisk pace.”

“The headline index signalled the fastest rise in business activity across the construction sector for 24 years. Total new orders expanded at one of the strongest rates since the summer of 2007, mostly reflecting robust demand for residential projects and a boost to commercial work from the reopening UK economy.”

Strong demand in the industry prompted constructors to rapidly scale staffing levels to boost production capacity in order to cope with swelling backlogs of work.

The rate of job creation moderated since May but remained among the fastest seen over the past seven years.

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Input inflation climbs at record pace

Despite the strong growth in output, prices for raw materials rose at their fastest pace on record, caused by severe supply and demand imbalances.

Average prices paid for products and materials increased at a survey-record pace, caused by firms competing with each other to secure key inputs amid severe shortages, IHS Markit said.

Widespread scarcity of essential products resulted in a slowing down of completion times as construction firms had to deal with poor availability of construction components.

The survey recorded its worse month for supplier delays since the it began just over 24 years ago, and over 77 per cent of constructors reported longer lead times among suppliers.

“Supply chains once again struggled to keep up with demand for construction products and materials, with lead times lengthening to the greatest extent since the survey began in April 1997” Moore said.

“Escalating cost pressures and concerns about labour availability appear to have constrained business optimism at some building firms.”

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “A wave of new orders overwhelmed supply chains again this month where stock levels could not keep up with building work accelerating at the fastest rate since June 1997.”

“The meagre availability of raw materials placed obstacles in the path of stronger workflows where supplier delivery times extended into record-breaking territory once again and surpassed the height of disruption when the pandemic first hit.”

Concerns about intense inflationary pressures among producers is fuelling concerns that firms may start passing on higher costs to consumers.

Latest data from the ONS shows annual UK inflation is already running higher than the Bank of England’s target, reaching 2.1 per cent last month.

By Jack Barnett

Source: City AM

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Finance provider secures £15m funding to help boost housebuilding

Manchester-based Assetz Capital has become the first property-focused marketplace platform to receive funding from British Business Investments (BBI), a commercial subsidiary of the British Business Bank.

The £15m commitment from British Business Investments will support in excess of £100m of new lending to smaller businesses and smaller housing developers, helping them grow, as well as helping fuel the development of new homes across the UK.

The funding will be used for development finance loans and SME commercial mortgages originated by Assetz Capital.

Stuart Law, Assetz Capital CEO, said: “Assetz Capital was founded to help resolve the housing crisis and create a fairer lending landscape by providing funding to SMEs and property developers who were no longer being fully supported by traditional banks.

“To date, we’ve lent more than £1bn to UK businesses, providing over £100m of much-needed gross income to a community of 38,000 retail and institutional investors in the process.

“The support of British Business Investments is a further milestone in this mission, and we are grateful for their new backing towards our continuing commitment to addressing the housing crisis and SME funding gap.”

He added: “It’s a testament to the impact that can be delivered by Assetz Capital and a welcome addition to our growing stream of institutional funding sources, including other banks and investment funds.”

Catherine Lewis La Torre, British Business Investments CEO, said: “This £15m commitment to Assetz Capital supports British Business Investments’ objective to increase the diversity and supply of finance for smaller businesses across the UK.

“By providing finance to smaller housebuilders, we’re able to help them to fulfil their growth plans and increase the country’s new housing stock.”

Since being founded as a FinTech start-up in 2013, Assetz Capital has lent more than £1bn to smaller businesses and housebuilders, becoming one of the UK’s largest marketplace lenders in the process. It has funded the development of 4,846 homes across the UK.

In addition to funding housing developments, Assetz Capital funds care home construction, purpose-built student accommodation and provides commercial mortgages across a broad range of businesses – all with property as security for the loan.

By Neil Hodgson

Source: The Business Desk

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Aberdeen pushes ahead with largest council house programme in 50 years

The biggest council housebuilding programme in Aberdeen in more than half a century has taken another major step forward as plans progressed for 283 new homes.

First Endeavour LLP is set to deliver the housing units at Wellheads Road in Dyce after entering an agreement with Aberdeen City Council.

The site was marketed at a Developers’ Day held by the council last year to encourage the private sector to come forward with housing provision.

Council co-leader Councillor Jenny Laing said: “We are delighted to announce that we are partnering with First Endeavour LLP to provide nearly 300 council homes.

“As a council, we are committed to finding innovative ways to deliver both services and new infrastructure, including an additional 2,000 council homes.

“We are working with landowners and developers to provide much-needed local authority housing.”

Fellow council co-leader Councillor Douglas Lumsden said: “Our new-build programme is gathering momentum with a number of projects under way or about to start.

“This isn’t just about building housing – it’s about building communities and opportunities and ensuring that our city continues to prosper in an inclusive way.”

A First Endeavour LLP spokesperson said: “First Endeavour are delighted to be working with Aberdeen City Council to be building much-needed council homes in Dyce.

“These homes will be built to the highest standards to meet the needs of council tenants, including those with a disability.”

Last year 99 council homes were built at Smithfield, 80 are nearing completion at Manor Walk, 369 are earmarked for the former Summerhill Academy site, and there are plans for more new homes at Tillydrone, Kincorth, Craighill and Greenferns.

Project and programme consultancy Faithful+Gould has been appointed to help hit the target of 2,000 additional council homes across the city.

Stewart Ferguson, regional director of SNC Lavalin’s Faithful+Gould business, said: “Building upon our long-term relationship with Aberdeen City Council, we are delighted to be leading one of the most high-profile and ambitious housing programmes in a generation.

“The council’s innovative approach is based upon the ‘Building in Quality’ methodology and will positively contribute to Aberdeen’s social housing offer and the city’s prosperity.”

Source: Scottish Housing News

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Scottish Government urged to build on housebuilding momentum

As the level of housing completions continues to head in the right direction, the country’s home building industry has urged the Scottish Government to build on this positive news to enable it to deliver more of the homes Scotland’s growing population needs.

Official statistics released yesterday found there were 18,182 new build homes completed across all sectors over the year ending June 2018, an increase of 4%, or 695 homes, on the previous year.

The rise included increases in housing association completions (25% or 618 homes) and local authority completions (25% or 306 homes), whilst private-led completions fell by 229 homes (2%). The total number of social sector completions (housing association and local authority starts combined) increased by 924 homes (25%).

There were 19,903 all sector new build starts in the 12 months to end June 2018, a figure which is 1,121 homes (6%) higher than the number of completions in the same period, but which is a decrease of 1,231 homes (6%) on the 20,534 starts in the previous year. Private-led starts fell by 1,593 homes (11%) and housing association approvals decreased by 215 homes (4%), whilst local authority starts increased by 577 homes (48%). The total number of social sector starts (housing association and local authority starts combined) increased by 362 homes (6%).

Nicola Barclay, chief executive of trade body Homes for Scotland, said: “It’s great to see ongoing growth in the overall number of homes being built, but just under seven hundred extra homes over the last year is not going to solve our housing crisis. In order to return to the levels of a decade ago, we would need to see ten times this number on an annual basis.

“Scotland’s housing market remains amongst the most affordable places to live in the UK, and huge social and economic opportunities exist for the Scottish Government to attract further housing investment from both within Scotland and elsewhere – if it can create and maintain the favourable conditions this requires.

“Ways in which this can be achieved include ensuring the Planning Bill currently going through the Scottish Parliament meets the original objective of delivering more homes; encouraging more entrants into the industry; supporting those SMEs who want to develop more homes; preserving a regulatory environment that promotes investment and ensuring policies like Help to Buy are continued until such times that the mortgage market fully supports First Time Buyers.

“Ultimately, it needs joined-up thinking across portfolios, therefore we look forward to seeing how (this week’s) Budget supports sustainable housing growth so builders can contribute even more to Scotland’s social wellbeing and economic success.”

Housing minister Kevin Stewart welcomed the figures which also revealed a 21% rise in the number of affordable homes delivered in Scotland during the last year.

A total of 8,767 affordable homes were delivered for the year to September 2018, an increase on the 7,271 completions in the previous year.

As a result, the total number of affordable homes provided since 2007 has reached 80,104.

The figures also showed there were 5,340 social rented homes delivered, an increase of 864 homes, or 19%, on the previous year.

Kevin Stewart MSP said: “Making sure everyone has a safe, warm and affordable home is central to our drive for a fairer and more prosperous Scotland.

“That is why I am proud that this government has now delivered more than 80,000 affordable homes since 2007. This is a significant achievement – boosting the supply of affordable homes in communities right across the country.

“During the course of this Parliament we are investing more than £3 billion to deliver our target of at least 50,000 affordable, high-quality homes, including 35,000 homes for social rent.

“While we know this is an ambitious target, we have shown we can deliver on housing and we will continue to do so.”

However Graeme Brown, director of Shelter Scotland, said the figures prove the Scottish Government has a long way to go to meet its 2021 housing target.

He said: “The programme to develop 35,000 new homes for social rent by 2021 is one of the most important projects on the Scottish Government’s agenda.

“The latest figures show that with half the time gone only 11,825 social homes have been completed to date. This leaves much of the target on the drawing board and means we will have to see an acceleration in building if the target is to be met.”

Graeme Brown added:  “The more homes programme is a promise to Scotland that must not be broken. It represents the biggest investment in social housing since the 1970s and a chance to begin to restore the foundations of our housing safety net which has been badly damaged by decades of underinvestment.”

Source: Scottish Construction Now

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Britain could end homelessness in a decade, claims new report

Homelessness in Britain could be eradicated within 10 years with the correct measures in place, according to a report.

Government policies needed to end homelessness have been set out in a report by charity Crisis called Everybody In: How To End Homelessness In Great Britain.

The plan has been endorsed by experts in the US, Canada and Finland, who are leading successful movements to end homelessness in their countries, Crisis said.

The report follows work with the Chartered Institute of Housing, Heriot-Watt University, the National Housing Federation, and PricewaterhouseCoopers LLP (PwC).

The plan says that a national roll-out of Housing First would benefit more than 18,000 homeless people, by providing homes that come with a package of specialised support.

The plan also sets out the policies needed to support people once they are housed, including better rights and longer tenancies for private renters, and reforming housing benefits.

Ending homelessness will also require hospitals, prisons, the care system, and other parts of the state to play a role, the research finds.

Crisis said these organisations should be legally required to help prevent people leaving their care from becoming homeless.

The plan also proposes that job centres have homelessness specialists.

PwC found that, over the next decade, these policies would cost £9.9 billion and deliver benefits worth £26.4 billion, Crisis said.

Jon Sparkes, chief executive of Crisis, said: “For the first time ever, we have a comprehensive plan that shows exactly how we can address the root causes of homelessness and make it a thing of the past.

“Other parts of the world are taking huge strides towards ending it, and Britain can too.

“We must not become a society that simply accepts homelessness as ‘a sad fact of life’, because the good news is that we know it doesn’t have to be this way.”

This includes people living on the streets, in cars and tents, or in unsuitable temporary accommodation.

Martin Tett, the Local Government Association’s Housing spokesman, said: “It is essential that all councils are able to borrow to build new homes and adapt welfare reforms to prevent homelessness from happening in the first place.

“A genuine renaissance in council housebuilding would increase housing supply, boost home ownership and reduce homelessness.”

A spokeswoman for the Ministry of Housing, Communities and Local Government said it was committed to tackling homelessness and rough sleeping, working with charities like Crisis.

“We are investing more than £1.2 billion to tackle all forms of homelessness and just last week we announced £30 million for councils to help boost the immediate support available to people living on the streets.

“We are also investing £9 billion to build more affordable homes and are piloting the Housing First approach in three major regions to get people off the streets and into stable accommodation.”

Source: Herald Scotland