Was the Beast to Blame?

May 31, 2018 11:55 am Published by

As the MD of a firm of geo-environmental and geotechnical engineers, I have a vested interest in the well-being of our house building industry and, so every once in a while, I take a look at the number of registrations and completions reported on the NHBC’s website.

The NHBC is the largest provider of warranty and insurance cover for new homes in the UK and the number of homes being registered for its products is recognised as a good indicator of the number of homes being built and, therefore, the health of the new build industry.

As such I was disappointed to visit the NHBC’s website recently and see that, at 36,000, the number of homes registered with the NHBC in Q1 this year was the lowest of any quarter since back in 2016 and way down on the 42,000 reported for Q1 of 2017.

Particularly as data from the ONS also supports a decline in construction industry and private housing sector output in Q1.

So why the apparent downturn? And is it cause for concern?

Well, an obvious reason for the lower number registrations was the infamous Beast from the East. Plenty of winters have been colder, however I cannot remember one with so much snow. My children loved it, house builders and developers understandably didn’t.

Indeed the NHBC reports that there are “anecdotal reports from house builders that up to 30 days were lost on site in the first quarter of the year as a direct result of the arctic conditions”.

So that’s it then. Nothing to worry about. Things should be back to normal now.

Hopefully yes, but I for one am going to keep a close eye out for the full Q2 data from the NHBC that will shortly be available as well as the latest new build data from the ONS.

The current state of Brexit is one reason for this.

All this time we’ve been drawing ever closer to D-day and March 2019 when we leave the EU and the now ‘initial’ transitional period is due to start. However, the long-term game is still unclear and with time having ticked away I wonder if things are now finally starting to bite.

Sterling is still resolutely low against the Euro and as Samuel Tombs, chief UK economist at Pantheon Macroeconomics, says: “Rising interest rates and Brexit uncertainty will prove a toxic combination for the construction sector.”

Brexit also leads me neatly onto another key issue – the skills shortage.  60% of respondents to a recent RCIS survey cited labour shortages as a serious constraint to growth and Brexit is not helping here either with a survey of 37,000 house building workers in the UK revealing that 17.7% are from the EU, rising to 46% of workers in London. 

Saying all this I don’t think we need to worry about things too much just yet. Our industry is used to roller coaster statistics and the fact remains that between November 2017 and January 2018, the house building statistics were the same as last year, indeed, slightly up. 

So let’s greet these latest findings with caution.  There may be lessons to learn but let’s keep our fingers crossed that the second quarter results shows figures for the housebuilding industry with a positive growth.

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This post was written by Mike Nicholas

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