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House Building: January to March Quarter 2005

This statistical release presents figures on new house building starts and completions in England and its regions up to the quarter ending March 2005. House building figures are also provided for the other UK countries.

Summary
• Provisional figures for England for 2004/05 show:
• 173,500 starts, up 8 per cent on the figure for 2003/04
• 154,600 completions, up 8 per cent on the figure for 2003/04
• In England during the quarter to March 2005 there were:
• 40,300 housing starts, down 5 per cent on the same period in 2004.
• 33,600 housing completions, up 5 per cent on the same period in 2004.

Most of this increased house building activity was in London, where in 2004/05 there were 23,920 housing completions up 23 per cent on the previous year. Outside London, completions were up 5 per cent.

Provisional 2004/05 figures for Wales show:
• 9,700 starts, down 4 per cent on the figure for 2003/04
• 9,500 completions, up 15 per cent on the figure for 2003/04

Recent trends in house building in England
There have been upward trends in housing starts and completions in England since 2002/03. At this time, starts and completions were running at about 37,000 and 34,000 per quarter. These rates have increased to 43,000 and 38,000 per quarter respectively up to the end of 2004/05 with starts tailing off slightly over the last financial year.

Regional trends

North and Midlands
Starts are levelling off after recent upward trends in the North West, Yorkshire and the Humber and the East Midlands. Trends in completions remain fairly level.

London, South East, East and South West
London, South East and East have seen upward trends since 2002/03. In the South East, starts and completions were running at around 6,400 and 5,600 per quarter in 2002/03. These rates have now risen to 7,500 and 6,500 up to the quarter to March 2005. Starts however, have shown a downturn in the year up to the most recent quarter.

London has seen large rises in starts and completions since mid 2003/04, although the trend has levelled out up to the most recent quarter. Starts and completions per quarter have remained level in the South West.

The European Construction Sector is Among most Dangerous

In the current edition of Construction Management and Economics, Søren Spangenberg, Harald Hannerz and Finn Tüschen of the Danish National Institute of Occupational Health, examine the frequency of accidents that lead to hospitalisation.

Their research reveals that the construction sector continues to be one of the most injury-prone industrial sectors in Europe. The development of a trans-European transportation network presents numerous challenges in preventing injuries. Spangenberg, Hannerz and Tüchsen have compared hospitalising injuries among workers engaged in the construction of different types of major
tunnel and bridge traffic links. They show a big variation in hospitalisation injury rates with different types of construction. While tunnel workers face poison gases, other workers suffer head injuries. The EU-directive on environmental impact assessment in pre-project decisions has lead to increased environmental protection and awareness. However, the high hospitalisation injury rates and the big variation with construction type both provide an argument to also include an occupational risk assessment in the pre-project decision making process in order to increase worker safety.

Full details can be found in the current issue of Construction Management and Economics, Volume 23 Number 3, published by Taylor and Francis.

For further details regarding the research, contact Mr Søren Spangenberg, National Institute of Occupational Health, Lersø Parkallé 105, DK-2100, Copenhagen, Denmark, Tel +45-3916 5200, Email: mailto:ssp@ami.dk

For further details regarding articles in the journal Construction Management and Economics, contact Dr Will Hughes, Editor, Dept Construction Management & Engineering, University of Reading, PO Box 219, Reading, RG6 6AW, UK, Tel 0118-931 8201, Fax 0118-931 3856, Email: mailto:w.p.hughes@reading.ac.uk

For further information about subscriptions contact Nicola McArthur, 4 Park Square, Milton Park, Abingdon, Oxfordshire, OX14 4RN, UK
Email: mailto:nicola.mcarthur@tandf.co.uk or see web-site http://www.tandf.co.uk

New Construction Orders: February 2005

Orders in the year to February 2005 rose by six per cent compared to orders in the previous twelve month period, and orders in the three months to February 2005 fell by one per cent compared to the same three months a year earlier.

Orders in the three months to February 2005 rose by one per cent compared to the previous three months, due to a rise in private commercial orders - all other sectors fell. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in the year to February 2005 rose by 12 per cent compared to those in the previous year. Orders in the three months to February 2005 fell by two per cent compared with the previous three months, but rose by one per cent compared with the same three months a year earlier.

Public housing and housing association orders rose by 14 per cent in the year to February 2005 compared with the previous year. Public housing and housing association orders in the three months to February 2005 fell by 37 per cent compared to the previous three months, and by six per cent compared to the same three months a year earlier. All comparisons in this sector are affected by large variations due to its relatively small size.

Infrastructure orders in the year to February 2005 decreased by 12 per cent compared with the previous twelve month period. Orders in the three months to February 2005 fell by nine per cent compared with the previous three months, but rose by 13 per cent when compared to the same three months a year earlier.

Public non-housing orders (excluding infrastructure) in the year to February 2005 rose by 10 per cent compared with the previous twelve month period. Orders in the three months to February 2005 fell by two per cent compared with the previous three months, but were 15 per cent higher compared to the same period a year earlier.

Private commercial orders in the year to February 2005 were 8 per cent higher than in the previous year. Orders in the three months to February 2005 rose by 21 per cent compared to the previous three months, but fell by 15 per cent compared to the same period a year earlier.

Private industrial orders in the year to February 2005 fell by three per cent compared to the previous year. Orders in the three months to February 2005 fell by six per cent compared to the previous three months, but rose by 16 per cent compared to the same period a year earlier.

Griffiths & Hart Publish Construction Act Consultation: 'Improving Payment Practices in the Construction Industry'

DTI Construction Minister Nigel Griffiths and Edwina Hart, the Welsh Assembly Government Minister for Social Justice and Regeneration launched a joint consultation on 22nd March on 'Improving Payment Practices in the Construction Industry'.

The consultation proposes a number of amendments to Part II of the Housing Grants Construction and Regeneration Act 1996 and the Scheme for Construction Contracts (England and Wales) Regulations 1998.

The proposals are aimed at improving the ability of parties to a construction contract to:
* reach agreement on what should be paid and when given the work done under the contract or, where they cannot agree, to make an informed referral to, or response at, adjudication;
* manage cash flow and enable completion of work on the project in the event of problems such as defaulted payments, disputes or insolvencies elsewhere in the supply chain; and
* refer disputes to adjudication without disincentives such as avoidance, frustration or unnecessary challenge.

Nigel Griffiths announced the consultation in a written statement in the House of Commons. Commenting, he said:
'Fair payment practice is something everyone agrees with and a fair payment culture underpins any progressive and modern industry.

'This consultation considers a number of issues around the key principles of improving the ability of people in the construction industry to manage cash flow on construction projects and to bring about effective delivery, on time and to budget. It provides the opportunity for the whole industry and its clients to come together around a shared set of proposals.'

Edwina Hart added that:
'Cash flow is the lifeblood of the construction industry. But it is clear that there are serious issues arising from current payment practices in the construction industry. During a period in which investment in national infrastructure and local communities is increasing, it is vital to maintain a healthy commercial environment in which the construction industry can prosper.

'I would urge all respondents to consider the issues raised and how they might be addressed for the benefit of the industry, its clients and the wider community.'

The consultation considers issues and proposals identified during Sir Michael Latham's initial review of the Construction Act, published in September 2004. Following the announcement of the review the Budget in March 2004, Nigel Griffiths appointed Sir Michael to produce his report with input from the construction industry representative bodies and other stakeholders.

Commenting on the proposals identified by Sir Michael, Nigel Griffiths said:
'Sir Michael's report is a valuable piece of work and has raised some key issues. While the continued support of the construction industry representative bodies is vital to the effectiveness of this consultation process, we also hope to build a wider and deeper consensus on how to improve the construction contracts legislation and payment practices in the construction industry.

'We have come a long way since the announcement of the review in the 2004 Budget and I hope this consultation process can take the dialogue within the industry further forward over the coming months.'

The consultation period will close on 21st June 2005.

Griffiths Praises Forum's Success in Driving Sustainability Agenda - One Year On

Construction Minister, Nigel Griffiths, acknowledged on 15th March the successes of the Sustainability Forum - the group charged by the DTI to investigate and make recommendations on improving take up of sustainable development by the construction and property sectors - one year on.

Nigel Griffiths said:
'This forum is all about making the case for a more sustainable construction industry and spreading the word through industry contacts, practical help and official guidance. I am very grateful for the work and personal commitment of its members under the chairmanship of Ian Coull. They have all made a very valuable contribution towards raising the profile of sustainability issues in construction and driving forward this very important agenda.'

So far the Sustainability Forum, whose membership is wide-ranging and includes stakeholders from government, environmental groups and constructors has delivered:

* guidance publications: Making the Most of our Built Environment (March 2004); and Site Waste Management Plans - Guidance for Construction Contractors and Clients (8th July 2004). The Group is currently developing a designers' guide 'Waste Minimisation By Design', to be published later this year and is involved in the development of the Code for Sustainable Buildings;

* a series of Breakfast Seminars for senior industrialists to develop awareness of the need to minimise carbon emissions from buildings through better use of efficient building materials and reduced use of energy systems; and

* it has informed ongoing discussion and debate, for example by providing the key issues paper for the Better Buildings Summit in October 2003 and more recently by addressing some of the recommendations of the Sustainable Buildings Task Group 2004.

The forum is currently developing a Skills Matrix, in association with CITB, to identify the construction industry's medium to longer term training needs; and a 'Carbon index' rating system is being developed for buildings which can be compared with the present 'A-G' energy efficiency scale used for domestic 'white goods'.

The Chairman, Ian Coull, is Chief Executive of Slough Estates Ltd and replaced Sir Martin Laing when the Sustainable Construction Task Group was reconstituted as the Sustainability Forum in 2004.

New Construction Orders: January 2005

Orders in the year to January 2005 rose by nine per cent compared to orders in the previous twelve month period, and orders in the three months to January 2005 rose by nine per cent compared to the same three months a year earlier.

Orders in the three months to January 2005 rose by five per cent compared to the previous three months, with increases in all sectors except public and private housing orders. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in the year to January 2005 rose by 16 per cent compared to those in the previous year. Orders in the three months to January 2005 fell by three per cent compared with the previous three months, but rose by eight per cent compared with the same three months a year earlier.

Public housing and housing association orders rose by 14 per cent in the year to January 2005 compared with the previous year. Public housing and housing association orders in the three months to January 2005 fell by 32 per cent compared to the previous three months, and by two per cent compared to the same three months a year earlier. All comparisons in this sector are affected by large variations due to its relatively small size.

Infrastructure orders in the year to January 2005 decreased by 23 per cent compared with the previous twelve month period. Orders in the three months to January 2005 rose by 12 per cent compared with the previous three months, and by six per cent when compared to the same three months a year earlier.

Public non-housing orders (excluding infrastructure) in the year to January 2005 rose by nine per cent compared with the previous twelve month period. Orders in the three months to January 2005 rose by four per cent compared with the previous three months, and were 26 per cent higher compared to the same period a year earlier.

Private commercial orders in the year to January 2005 were 27 per cent higher than in the previous year. Orders in the three months to January 2005 rose by 20 per cent compared to the previous three months, and by 10 per cent compared to the same period a year earlier.

Private industrial orders in the year to January 2005 fell by 11 per cent compared to the previous year. Orders in the three months to January 2005 rose by four per cent compared to the previous three months, but fell by 12 per cent compared to the same period a year earlier.

Redrow to Meet Challenge to Sell New Homes for £60,000

Redrow Group PLC will be the first large UK housebuilder to meet the government's challenge to sell new homes for 60,000 stg, when it announces its results this week, according to the Financial Times.

Redrow will start its new range of housing, called Debut, at a site in Rugby, where the cost of a one-bedroom apartment will be 54,995 stg, rising to 119,995 stg for a two-bedroom, two-storey home, said the paper.

New methods of construction will cut cost of building new homes to about 55 stg per square foot - just over half the cost of a standard build, the Financial Times quoted chief Paul Pedley as saying.

John Prescott, deputy prime minister, last year lambasted the housing industry for making record profits at the expense of first-time buyers who were being priced out of the market.

DTI:Output and Employment in the Construction Industry

The total volume of construction output in 2004 rose by four per cent compared to the previous year. Overall new work rose over the same period, despite a decrease in the infrastructure sector. Repair and maintenance was unchanged, with decreases in the public and private non-housing sectors offsetting increases in the public and private housing R&M. Output in the fourth quarter of 2004 rose by one per cent compared to the third quarter in volume terms and was broadly unchanged in current prices.

The total volume of new work in 2004 was seven per cent higher compared with the previous year but was unchanged in the fourth quarter compared with the previous quarter. The total volume of repair and maintenance work was unchanged in 2004 compared with the previous year, but was two per cent higher in the fourth quarter of 2004 compared to the previous quarter.

New private housing work in 2004 was 13 per cent higher compared with the previous year and the fourth quarter of 2004 was one per cent higher than the previous quarter. New work in the public housing sector in 2004 was 20 per cent higher (on a small base figure) compared with the previous year but the latest quarter was 10 per cent lower than the previous quarter. New infrastructure output in 2004 was 13 per cent lower compared with the previous year, and the fourth quarter of 2004 fell by 10 per cent compared with the previous quarter.

New construction work in the private industrial sector in 2004 was 10 per cent higher compared with the previous year, and rose by six per cent in the fourth quarter compared with the previous quarter. New private commercial output in 2004 was six per cent higher compared to the previous year and was three per cent higher in the fourth quarter of 2004 compared to the previous quarter. New work in the public non-housing sector (excluding infrastructure) in 2004 rose by 15 per cent compared to the previous year and rose by two per cent compared with the previous quarter.

Housing repair and maintenance work (including improvement work) in the public sector was eight per cent higher in 2004 compared with the previous year and was five per cent higher in the most recent quarter compared with previous quarter. Housing repair and maintenance work in the private sector in 2004 was one per cent higher compared with the previous year but fell by one per cent in the fourth quarter compared to the previous quarter.

Repair and maintenance work in the public non-housing sector in 2004 was four per cent lower compared with the previous year, but was two per cent higher in the most recent quarter compared with the previous quarter. Repair and maintenance work in the private non-housing sector in 2004 was four per cent lower compared with the previous year but was three per cent higher in the most recent quarter compared with the previous quarter.

Employment
The seasonally adjusted number of employees in employment in October 2004 was two per cent lower compared with July 2004 but was four per cent higher when compared with October 2004. Total employment (including the self-employed) in October 2004 fell by one per cent compared with July 2004 but was four per cent higher compared with October 2003.

DTI: New Construction Orders: December 2004

Orders in 2004 rose by six per cent compared with 2003, and orders in the fourth quarter of 2004 rose by 11 per cent compared to the same quarter a year earlier. Orders in the fourth quarter of 2004 rose by four per cent compared to the previous quarter, with increases in all sectors except public and private housing orders. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in 2004 rose by 16 per cent compared to those in 2003. Orders in the fourth quarter of 2004 fell by four per cent compared with the previous quarter, but rose by 11 per cent compared with the same quarter a year earlier.

Public housing and housing association orders rose by 17 per cent in 2004 compared with 2003. Public housing and housing association orders in the fourth quarter of 2004 fell by seven per cent compared to the previous quarter, but rose by 23 per cent compared to the same quarter a year earlier. All comparisons in this sector are affected by large variations due to its relatively small size.

Infrastructure orders in 2004 decreased by 28 per cent compared with 2003. Orders in the fourth quarter of 2004 rose by 12 per cent compared with the previous quarter, but fell by four per cent when compared to the same quarter a year earlier.

Public non-housing orders (excluding infrastructure) in 2004 rose by six per cent compared with 2003. Orders in the fourth quarter of 2004 rose by 19 per cent compared with the previous quarter, and were 15 per cent higher compared to the same quarter a year earlier.

Private commercial orders in 2004 were 19 per cent higher than in 2003. Orders in the fourth quarter of 2004 remained broadly unchanged compared to the previous quarter, but rose by 17 per cent compared to the same quarter a year earlier.

Private industrial orders in 2004 fell by 10 per cent compared to the previous year. Orders in the fourth quarter of 2004 rose by 18 per cent compared to the previous quarter, but fell by five per cent compared to the same quarter a year earlier.

Bovis Homes Group PLC Trading Update

Bovis Homes Group PLC issued on 11th January the following update on trading ahead of reporting the Group’s preliminary results for the year ended 31st December 2004, on Monday 14th March 2005.

'We anticipate announcing record profits broadly in line with the consensus of current broker forecasts.

Legal completions, including those units built on third party land, increased by approximately 9% over those reported in the previous year. The average selling price improved to £198,000 compared with £185,000 in 2003. As previously advised, land sales and other income have exceeded those reported for the previous year.

A number of strategic land purchases were made in the last quarter further increasing the Group’s land bank. Closing gearing was approximately 3%.
GDP is forecast to grow by over 2% in 2005. High levels of employment, continuing low interest rates and an imbalance between housing supply and demand should support a healthy housing market in respect of the sector and locations in which the Group operates'.

Government Promises Keep Construction Alive

According to the latest Construction Industry Forecasts published on 7th January by the Construction Products Association, Government investment is key to the industry's continued growth.

Commenting on these forecasts, the Association's Chief Executive, Michael Ankers, said: 'After 10 years of continuous growth in construction output, prospects for the industry over the next 3 years are less rosy, with growth slowing in 2005 to just 0.8%. Although we remain confident that the industry will avoid recession, this is critically dependent on Government continuing to deliver its proposed investment programme in the built environment. The programmes for schools, hospitals, and social housing are particularly important at this time given the continued decline in infrastructure investment, made worse by the Government's recent decision to allow councils to divert money away from crucial work on road maintenance.

'Looking further ahead, we see output in the industry beginning to pick up in 2006 (+2.4%) and 2007 (+3.4%) when continued Government investment wili be supported by a recovery in private construction activity, especially in the commercial sector. These years also see a reversal of recent declines in infrastructure spending, due in particular to increased investment in water-related infrastructure.'

Other key points in the Association's Forecasts are:
• A 'soft landing' for the housing sector, although housing starts will fall below levels reached in recent years.
• A reduction in private housing repair and maintenance because of the slower rate of consumer spending and a lower level of property transactions
• Increased provision in social housing and repair and maintenance of the existing housing stock
• A gradual recovery in the office sector towards the end of the forecast period to 2007

New Construction Orders: November 2004

Orders in the year to November 2004 rose by three per cent compared to orders in the previous twelve months period, and orders in the three months to November 2004 rose by two per cent compared to the same period a year earlier.

Orders in the three months to November 2004 fell by four per cent compared to the previous period, with decreases in public non housing and private commercial orders more that offsetting rises in public and private housing, infrastructure and private industrial orders. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in the year to November 2004 rose by 13 per cent compared to the previous year. Orders in the three months to November 2004 rose by one per cent compared with the previous period, and rose by 16 per cent compared with the same period a year earlier.

Public housing and housing association orders in the year to November 2004 rose by 19 per cent when compared to the previous year. Public housing and housing association orders in the three months to November 2004 rose by 16 per cent compared to the previous period, and by 32 per cent compared to the same period a year earlier. All comparisons in this sector are affected by large variations due to its relatively small size.

Infrastructure orders in the year to November 2004 decreased by 25 per cent compared with the previous twelve months. Orders in the three months to November 2004 rose by 11 per cent compared with the previous period, and by one per cent when compared to the same period a year earlier.

Public non-housing orders (excluding infrastructure) in the year to November 2004 fell by 9 per cent when compared with the previous twelve months. Orders in the three months to November 2004 fell by six per cent compared with the previous period, and were 10 per cent lower compared to the same period a year earlier.

Private commercial orders in the year to November 2004 rose by 20 per cent compared to the previous year. Orders in the three months to November 2004 fell by 18 per cent compared to the previous period, but rose by one per cent compared to the same period a year earlier.

Private industrial orders in the year to November 2004 fell by eight per cent compared to the previous year. Orders in the three months to November 2004 rose by seven per cent compared to the previous period, but fell by 15 per cent compared to the same period a year earlier.

Output and Employment in the Construction Industry: Third Quarter 2004

The total volume of construction output in the year to the third quarter of 2004 rose by four per cent compared to the previous year. Overall new work rose over the same period, despite a decrease in the infrastructure sector. Repair and maintenance rose, with increases in the public and private housing sectors outweighing falls in the public and private non-housing R&M. Output in the third quarter of 2004 rose by one per cent compared to the third quarter in volume terms and by three per cent in current prices. A revision has also been made to information for the first quarter of 2003, following a review of early estimates of construction output for GDP carried out jointly by DTI and ONS.

The total volume of new work in the year to the third quarter of 2004 was seven per cent higher compared with the previous year and was one per cent higher in the third quarter compared with the previous quarter. The total volume of repair and maintenance work was one per cent higher in the year to the third quarter of 2004 compared with the previous year, and one per cent higher in the third quarter of 2004 compared to the previous quarter.

New private housing work in the year to the third quarter of 2004 was 15 per cent higher compared with the previous year and the third quarter of 2004 was five per cent higher than the previous quarter. New work in the public housing sector in the year to the third quarter of 2004 was 24 per cent higher (on a small base figure) compared with the previous year but the latest quarter was eight per cent lower than the previous quarter. New infrastructure output in the year to the third quarter of 2004 was 12 per cent lower compared with the previous year, and the third quarter of 2004 fell by one per cent compared with the previous quarter.

New construction work in the private industrial sector in the year to the third quarter of 2004 was 15 per cent higher compared with the previous year, and rose by four per cent in the third quarter compared with the previous quarter. New private commercial output in the year to the third quarter of 2004 was two per cent higher compared to the previous year and was unchanged in the third quarter of 2004 compared to the previous quarter. New work in the public non-housing sector (excluding infrastructure) in the year to the third quarter of 2004 rose by 19 per cent compared to the previous year and rose by one per cent compared with the previous quarter.

Housing repair and maintenance work (including improvement work) in the public sector was nine per cent higher in the year to the third quarter of 2004 compared with the previous year but was unchanged in the most recent quarter compared with previous quarter. Housing repair and maintenance work in the private sector in the year to the third quarter of 2004 was two per cent higher compared with the previous year but was unchanged in the third quarter compared to the previous quarter.

Repair and maintenance work in the public non-housing sector in the year to the third quarter of 2004 was one per cent lower compared with the previous year, but was five per cent higher in the most recent quarter compared with the previous quarter. Repair and maintenance work in the private non-housing sector in the year to the third quarter of 2004 was three per cent lower compared with the previous year but was one per cent higher in the most recent quarter compared with the previous quarter.

The seasonally adjusted number of employees in employment in July 2004 was one per cent higher compared with April 2004 and was eight per cent higher when compared with July 2003. Total employment (including the self-employed) in July 2004 rose by one per cent compared with April 2004 and was seven per cent higher compared with July 2003.

Review of Construction Output Statistics

The joint DTI/ONS review of construction output statistics was published 1st December 2004. This review was established in October 2003 in response to a revision to construction output that led to a large revision to the estimate of GDP growth for Quarter 2 2003, published in September 2003.

In February 2004, an interim report of this review was published. It indicated that further research was needed to explain the large fall in construction output in Q1 2003. The final phase of the construction review uncovered a processing error in the DTI's survey results for this period, and its correction will lead to revisions to DTI's published estimates of quarterly growth in the construction sector for both Q1 2003 and Q2 2003. This correction has the impact of changing the growth rates for Q1 2003 from -2.6% to +0.5% and for Q2 2003 from 5.3% to 2.1%.

The impact on GDP of these revisions to construction output growth is relatively small. If there were no other changes to construction output, or other GDP components, the effect of correcting the construction output data would be to revise the quarterly growth rate of GDP for Q1 2003 up 0.1 percentage points and to revise the growth rate for Q2 2003 down 0.1 points. Revised GDP data will be published in the Quarterly National Accounts release at 09:30 on 23rd December, in accordance with National Accounts revisions policy.

Bovis Homes Group PLC Trading Update

Bovis Homes Group PLC met with analysts and investors on 9th November and provided a trading update prior to visiting its Swindon developments.
 
Malcolm Harris, Chief Executive of Bovis Homes advised:
 
'Following a strong housing market in the first six months of the year, sales reservations achieved by the Group from July to October have slowed as the housing market has moderated in response to interest rate rises. The Group continues to hold a greater number of cumulative reservations for the year to date compared with the same period in 2003. The increase now stands at 6%. As a result of this good sales position, legal completions for the current financial year are expected to be above last year’s numbers but, because of the recent sales reservation rate, could be below the volume previously anticipated.
 
The Group continues to operate a policy of profit optimisation from the houses it sells and can report that average sales prices and margins remain in line with Group expectations. Other income has increased above that previously expected.
 
The Group now anticipates that its average net borrowings for 2004 will be lower than previously anticipated given the already reported cautionary approach by the Group to land investment in the second half of the year.
 
The fundamentals relating to our industry remain sound and based upon existing market conditions we are confident of delivering a good set of results this year.
 
In anticipation of the change in market conditions, the Group has, over the past two years, developed a range of new value driven quality products which have gained planning consent on a number of developments. This further innovation in product design will allow the Group to satisfy the demand from first time buyers for a high quality affordable home. Within the Group’s projected turnover for 2005, we anticipate legally completing approximately 2,000 homes with a sales price below £200,000 compared with around 1,550 homes with a sales price below £200,000 this year.
 
Our strong land holdings and innovative product range provide us with confidence that we can deliver increased volumes over the coming years which we believe will continue to add shareholder value.'

Barker Housing Targets 'Unrealistic', Report Warns

House construction costs will rise by an inflation busting 16% this year and by 11.6% in 2005 with the upwards trend continuing, according to Experian, the global economic forecasting group.

The forecast, contained in its latest Construction Output Price Indicators four year projection model, raises questions about the government’s target for widespread new affordable housing in London and the South East.

'The recent Barker report identifies the need for 70,000 new private and 21,000 new publicly owned homes a year, mainly in London and the South East, but the rising costs of construction are making this ambition unrealistic,' said James Hastings, construction analyst at Experian's business strategies division.

'Increasingly higher rates commanded by skilled labourers like plasterers, plumbers and electricians, combined with escalating costs of brown field reclamation as well as local planning constraints, are rendering new build far less viable.

'The slowing property market, especially in London and the South East, combined with spiralling labour inflation and higher land costs, is effecting a tourniquet on builders’ margins,' he said.

'Should demand for additional housing increase further, with extra pressure being exerted on areas of construction where capacity constraints are already starting to show, the situation may worsen for housebuilders.'

Inflation in publicly owned housing is slightly more tempered, estimated to be rising at 7% this year and forecast to stabilise at 3 or 4% a year to 2008.

New Construction Orders: September 2004

Orders in the year to September 2004 rose by two per cent compared to orders in the previous twelve month period, and orders in the third quarter of 2004 rose by one per cent compared to the same period a year earlier. Orders in the third quarter of 2004 fell by eight per cent compared to the previous quarter, with decreases in all sectors except private housing and private industrial orders. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in the year to September 2004 rose by 13 per cent compared to the previous year. Orders in the third quarter of 2004 rose by nine per cent compared with the previous quarter, and rose by 30 per cent compared with the same quarter a year earlier.

Public housing and housing association orders in the year to September 2004 rose by 17 per cent when compared to the previous year. Public housing and housing association orders in the third quarter of 2004 fell by three per cent compared to the previous quarter, but rose by 29 per cent compared to the same quarter a year earlier. All comparisons in this sector are affected by large
variations due to its relatively small size.

Infrastructure orders in the year to September 2004 decreased by 21 per cent compared with the previous twelve months. Orders in the third quarter of 2004 fell by 22 per cent compared with the previous quarter, and by 14 per cent when compared to the same period a year earlier.

Public non-housing orders (excluding infrastructure) in the year to September 2004 fell by 10 per cent when compared with the previous twelve months. Orders in the third quarter of 2004 fell by 19 per cent compared with the previous quarter, and were 20 per cent lower compared to the same period a year earlier.
Private commercial orders in the year to September 2004 rose by 12 per cent compared to the previous year. Orders in the third quarter of 2004 fell by 10 per cent compared to the previous quarter, but were unchanged compared to the same period a year earlier.

Private industrial orders in the year to September 2004 fell by six per cent compared to the previous year. Orders in the third quarter of 2004 rose by four per cent compared to the previous period, but were 19 per cent lower compared to the same period a year earlier.

New Construction Orders: August 2004

Construction Orders in the year to August 2004 rose by two per cent compared to orders in the previous twelve month period, and orders in the three months to August 2004 rose by 11 per cent compared to the same period a year earlier. Orders in the three months to August 2004 fell by six per cent compared to the previous three months, with decreases in all sectors except private industrial orders. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in the year to August 2004 rose by nine per cent compared to the previous year. Orders in the three months to August 2004 fell by two per cent compared with the previous three months, but rose by 17 per cent compared with the same three months a year earlier.

Public housing and housing association orders in the year to August 2004 rose by 18 per cent when compared to the previous year. Public housing and housing association orders in the three months to August 2004 fell by nine per cent compared to the previous three months, but rose by 35 per cent compared to the same three months a year earlier. All comparisons in this sector are affected by large variations due to its relatively small size.

Infrastructure orders in the year to August 2004 decreased by 25 per cent compared with the previous twelve months. Orders in the three months to August 2004 fell by 12 per cent compared with the previous three months, and by 11 per cent when compared to the same period a year earlier.

Public non-housing orders (excluding infrastructure) in the year to August 2004 fell by three per cent when compared with the previous twelve months. Orders in the three months to August 2004 fell by 16 per cent compared with the previous three months, but were seven per cent higher compared to the same period a year earlier.

Private commercial orders in the year to August 2004 rose by 12 per cent compared to the previous year. Orders in the three months to August 2004 fell by four per cent compared to the previous three months, but were 20 per cent higher than in the same period a year earlier.

Private industrial orders in the year to August 2004 fell by one per cent compared to the previous year. Orders in the three months to August 2004 rose by nine per cent compared to the previous period, but were nine per cent lower compared to the same period a year earlier.

National Construction Week Set to be the Best Ever

National Construction Week 2004 (October 6th-13th) run by ConstructionSkills is the nationwide campaign designed to promote today's construction industry to young people and to give them the chance to experience the varied and exciting career opportunities in this field.

The Government is spending £76 billion on capital investment in schools, homes, roads and hospitals over the next 5 years. Coupled with continuing growth in private sector development, ConstructionSkills estimates 430,000 new recruits will be needed over this 5-year period to meet demand. In light of the industry's potential skills shortage, NCW provides a great platform for all companies and organisations involved in construction to reach future recruits.

National Construction Week 2004 is October 6th-13th. During that week thousands of young people and school children will visit architectural practices and engineering consultancies, try out traditional crafts such as painting, joinery, roofing, bricklaying and plastering, and visit live building sites to get a first-hand view of the many processes involved in construction.

Other young people will participate in one of the many innovative events that have been designed to illustrate the wide scope of the built environment and the related industries. These include a 'Speed Construction' event in Manchester, a series of 6th form planning debates in the East region looking at the pressing issue of new housing demand, and a `Primary school challenge' in the Kent and Sussex region.

The success of National Construction Week depends on as many people as possible getting involved and offering compelling opportunities for young people to experience construction. Over 1,500 events are already registered on the official web site, http://www.ncw.org.uk, but there is plenty of time for construction companies to organise their own events and many more ideas can be found on the web site.

For companies who would like to get involved but don't have the time or resources to organise a separate event, many of the planned activities listed on http://www.ncw.org.uk are looking for support from local construction companies in the form of sponsorship, man power and materials. Contact details for the organisers can be found on the web site.

Event organisers can advertise their event free of charge and ask for support by going to http://www.ncw.org.uk. Architects, designers, developers and construction companies who want to offer site or office visits can send their contact details to mailto:info@ncw.org.uk or fax them to 01509 210 016 and the National Construction Week team will endeavour to match them up with schools looking for site visits.

So if you haven't already got something planned, check out the web site and get involved to support your industry!

Nigel Griffiths Receives the Final Report of the Construction Act Review

On 17th September Construction Minister Nigel Griffiths received Sir Michael Latham's review of the operation of the Construction Act.

The review, into Part II of the Housing, Grants, Construction and Regeneration Act 1996, was announced in the Budget in March. Sir Michael Latham chaired a review group drawn from the construction industry. It received reports from the chairmen of the two working groups, looking at the adjudication and payment provisions of the Act. Those reports will inform the consultation document that the DTI will issue later this year.

The reports identify issues and suggest improvements that include:

On adjudication:
* preventing the practice of one party requiring that the referring party pay both parties legal costs irrespective of the outcome of the adjudication
* a reinforcement of the requirement for impartiality;
* the prohibition of trustee stakeholder accounts; and
* clarification of the requirement for a contract to be 'in writing'.

On payment:
* improving the effectiveness of the right of suspension; and
* limiting the right of cross-contract set-off.

Other issues related to payment are discussed within the Chairman's report and Sir Michael suggests they should be part of the Government consultation
Welcoming the report, Nigel Griffiths said:

'Sir Michael's review and the reports of the chairmen of the working groups form an excellent basis on which the DTI can draw up consultation proposals on improving the Construction Act. I am pleased the review has shown that the law, in general, works well even though it has raised some areas to reinforce standards of fairness and efficiency for the supply chain in the construction
process. I am most grateful to Sir Michael, his review group and particularly the working group chairs, Graham Watts and Richard Haryott, for all their work.'

Sir Michael echoed the Minister's words of thanks to the Chairmen and all involved, saying:

'The review group, and especially the working groups, have worked intensively over the summer months. The reports of their Chairman have produced a valuable package of proposals for improvements to the Construction Act. The review has found that there are some difficulties in the operation of the Act, and agreements on a way forward have been hard to reach at times. But we are all agreed the industry is better off for the framework the legislation has provided.

'All of the review group would wish to see the legislation strengthened and streamlined in certain respects. A firm basis of minimum standards in the contracting process is vital as the industry moves toward integrated construction supply teams and more collaborative approaches to project delivery. I am sure that clients, the industry and all interested parties will want to comment
constructively on the Government's response to these proposals when DTI publishes a consultation paper later this year.'

The DTI's consultation paper on improving contracting under the Construction Act is expected in the Autumn.

9.7% Quarterly Sales Increases for Builders Merchants Reflects Ongoing Property Buoyancy

Builders merchants sales nation wide were 9.7% higher during the three months from April to June this year than the previous quarter's, according to figures published recently by the Builders Merchants Federation (BMF).

Comparing the 12 month period from June 2003 to June 2004 with the same period ending a year ago, the overall annual increase was 3.4%. The actual monthly increase was 2.5% up on June 2003.

As in some previous quarters' the BMF latest sales indices show that its Northern region members enjoyed the greatest year-on-year increase which, after seasonal adjustment, was up to a record 20.4%. The Wales region was second highest with an increase of 14.9%.

Jeremy Hawksley, Director of the BMF, explains: 'Overall, our latest UK sales indicators are a true reflection of how busy our members were between April and June supplying high quality materials and products across the board of building industry requirements.'

He continues: 'Despite the Bank of England's five consecutive monthly interest rate rises, new build housing and home improvement activity remains buoyant. There are little or no signs that that this will change significantly. During the April - June quarter this year, new house prices rose by about 8%.

'It is encouraging for BMF members that the demand for additional living space, such as new home extensions, continues to be a major factor in upgrading the nation's existing housing stock. Also the self-build sector averages around 20,000 new homes a year which are built using our members'

equipment, materials and products. In addition home and garden improvements generally in the private sector are increasing steadily.

'Housing associations and local authorities, too, are increasing and improving the social sector housing stock which all requires valuable input from BMF members.'

In addition to its Northern region's bumper achievement, the current BMF seasonally adjusted sales indices for the twelve months to June 2004 shows that there was a good to moderate increase in all but one of its 13 regions, compared to the same period a year earlier. For instance, as well as Wales with its near 15% increase, Yorkshire was up 8.5%, the South East (South of the Thames) improved by 7.3% and the East Midlands put on 4.7%. The odd one out was the North West which took a 14.5% drop.

Web: http://www.bmf.org.uk

New Construction Orders: July 2004

Orders in the year to July 2004 fell by one per cent compared to orders in the previous twelve month period, but orders in the three months to July 2004 rose by 12 per cent compared to the same quarter a year earlier. Orders in the three months to July 2004 fell by six per cent compared to the previous quarter, with decreases in all sectors except infrastructure and public non-housing. All orders figures quoted are seasonally adjusted and in constant (2000) prices.

Private housing orders in the year to July 2004 rose by five per cent compared to the previous year. Orders in the three months to July 2004 fell by 10 per cent compared with the previous quarter, but rose by eight per cent compared with the same quarter a year earlier.

Public housing and housing association orders in the year to July 2004 rose by nine per cent when compared to the previous year. Public housing and housing association orders in the three months to July 2004 fell by 18 per cent compared to the previous quarter, and by two per cent compared to the same quarter a year earlier. All comparisons in this sector are affected by large variations due to its relatively small size.

Infrastructure orders in the year to July 2004 decreased by 26 per cent compared with the previous twelve months. Orders in the three months to July 2004 rose by 30 per cent compared with the previous quarter, but fell by seven per cent when compared to the same period a year earlier.

Public non-housing orders (excluding infrastructure) in the year to July 2004 fell by four per cent when compared with the previous twelve months. Orders in the three months to July 2004 rose by six per cent compared with the previous quarter, and were 22 per cent higher compared to the same period a year earlier.
Private commercial orders in the year to July 2004 rose by seven per cent compared to the previous year. Orders in the three months to July 2004 fell by 16 per cent compared to the previous quarter, but were 30 per cent higher than in the same period a year earlier.

Private industrial orders in the year to July 2004 fell by three per cent compared to the previous year. Orders in the three months to July 2004 fell by 12 per cent compared to the previous period, and were 21 per cent lower compared to the same period a year earlier.

Spending Review Brings Cautious Welcome from Construction Products Industry

The Construction Products Association gave a cautious welcome to the Chancellor's Spending Review announcement. Commenting on the proposals, Chief Executive, Michael Ankers said: 'We were pleased to see that the Government has recognised the need to increase the level of social housing provision in this country. However, although the 50% increase in new social housing starts by 2008 sounds significant, it translates into an additional 10,000 new social housing units a year, just half the increase that the recent Barker Review recommended. Nonetheless, it is a first step in the right direction.

'Spending proposals for schools and health facilities had already been announced, but it is re-assuring that the Government remains committed to its investment plans in these important areas. The targets the Government has set for improving such facilities require a long term funding commitment to help ensure the industry delivers best value solutions for the investment that is being made.

'Investment in the transport infrastructure does give us cause for concern. The Spending Review announced an increase in spending over and above current levels of expenditure. However, transport capital spending has been slashed by 10% next year and we remain concerned that the road building programme will be the loser. In addition, the PSA target for increasing rail usage has been dropped, suggesting little new investment in increasing rail capacity. We must now wait and see how the Government plans to address the scale of the transport problem this country faces when the new Transport Plan is released later this month.'

Other areas that the Association welcomed in the Spending Review included the additional funds available for science and technology, support for investment in low carbon technologies, and a target to eliminate fuel poverty by support for the less well off and the elderly to improve the insulation and heating of their homes. Further details are, however, awaited to enable the Association to assess whether these objectives will be delivered.

Web: http://www.constprod.org.uk

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