Featured Sector: Private Housing

Private housing activity has been a key driver behind the recovery in construction output over the last year. The rise in construction output last year followed a sharp rebound in project starts tracked by Glenigan since late 2011 as house builders opened up sites in anticipation of a sustained revival in market activity. This supported a 9.4% rise in private new housing output last year, while the ONS figures show that private housing output in the first half  of 2014 was up 20% on a year earlier.

Over the last year new housing activity has benefited from both improving consumer confidence and support from Government initiatives such as Help to Buy. These factors are expected to support a further strengthening in wider housing market activity and new house sales during 2014 and 2015.

Private residential work continues to expand at a strong rate with Glenigan’s index showing an annual 18% rise in the value of work starting on site in the year to August 2014 and an 11% in the last quarter. Only industrial work has grown more over the past year, and then from a very low base.

The private residential boom looks likely to continue as Glenigan’s research also shows that there has been a major upswing in the level of planning applications for private residential schemes over the past year.

Glenigan’s data shows that planning applications to build 114,875 units were submitted by private housebuilders in the year to Q2 2014. This is an overall rise of 47% on the preceding 12 months. Although London and the South East have experienced the largest level of project starts by value, the rest of the UK looks likely to experience the next flow of work.

Ten of the dozen regions experienced a major rise in the number of units being proposed through the planning system over the past 12 months. That increase illustrates a groundswell of support for private housebuilding that has seen the North West over-take the South East as the region experiencing the largest number of new homes proposed in the latest planning pipeline.

The only parts of the UK to record a decline was Wales, where the drop was marginal, and the east of England, where the planning pipeline shrank 15% against a strong total a year ago.

All the major privately-owned housebuilders are planning significant expansion and this rise in submissions has been driven as much by the major housebuilders as by an increase in the number of applications being submitted.

In the year to Q2 2013, 1,297 planning applications for private housing schemes of 10 or more units were submitted according to Glenigan’s research; in the most recent 12 month period, that figure had surged to 1,614.

Glenigan expects the improved market conditions to sustain the rise in private housing project starts and construction output over the next two years. By 2015 the value of underlying project starts is forecast to be more than double the low point seen in 2011.