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15th October 2012
The private residential sector is proving to tell one of the brighter stories for the construction industry in 2012; data collected by Glenigan show that project starts have been consistently above levels seen in 2011 and our most recent data on contracts show that the sector saw a glut of awards to the sector in the third quarter. This combined with government efforts to stimulate the sector as well as the Bank of England’s Funding for Lending Scheme make the outlook for the private housing sector one of the most attractive as we head into 2013. The recent spike in planning approvals also points to increased activity going into the New Year.
The chart above shows project starts and detailed planning approvals for the sector, the increase in activity can clearly be seen towards the end of 2012 for both indicators. The current driver at the minute would appear to be speculation that 2013 will bring continued recovery. Mortgage approvals for new house purchases as of August this year have shown little improvement, however the market seems to be expecting big things from the Banks Funding for Lending Scheme in boosting mortgage lending. In addition to lower wholesale funding costs for banks, early anecdotal evidence suggests the scheme is working, with a number of new low-rate mortgages having appeared on the market.
Further evidence that the market is heating up as the year draws to a close can be found in the September survey from the Royal Institute of Chartered Surveyors. Nationally a net balance of +26% of surveyors expect to see sales improving over the next three months. Regionally sales expectations in September for the next three months improved across Britain everywhere apart from the East of England and Scotland compared to the August survey.
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