Housing Statistics: September Quarter 2001

Housing Statistics September Quarter 2001 for England is a supplement to the DTLR’s annual compendium of statistics on housing.

The supplement covers housing renewals, disabled facilities grants, sales and transfer of local authority dwellings, including right-to-buy, dwelling prices, mortgage and land costs, and rents. England data (July-September 2001) includes:

* Just over 37 thousand dwellings were started. This varied from 1.5 thousand in the North East to 6.4 thousand in the South East.

* Of the 31,600 dwellings completed, 28,100 (89 per cent) were built by private enterprise. The equivalent figure for registered social landlords is 3,500 (11 per cent). Relatively few dwellings have been built for local authorities in recent years.

* The average selling price of houses purchased with a mortgage continues to grow. The latest figure is over £124,000, an increase of nearly 15 per cent compared with the same quarter last year. The average advance is £81,300.

* Nearly 13 thousand council dwellings were sold under the right-to-buy scheme. The total selling prices of dwellings for owner occupation was £392.4 million and the average discount on sales was 44 per cent.

Housing Statistics September Quarter 2001, compiled by DTLR statisticians, can be obtained from TSO, Publication Centre (mail, telephone and fax orders only), PO Box 29, Norwich NR3 1GN. Telephone orders 0870 600 5522, Fax orders 0870 600 5533. ISBN: 0-11-782085 7. Price £14. Alternatively, it can be found on the DTLR website: http://www.housing.dtlr.gov.uk/research/hss/q32001/index.htm

Construction Firms' Confidence at its Highest for Four Years

Confidence among construction firms has reached its highest level for four years, despite the prospect of higher interest rates.

Monthly findings from the Chartered Institute of Purchasing and Supply show no prospect of a let-up in growth rates for the sector.

It says more firms are predicting higher activity in 12 months' time than at present, with the confidence barometer for March at 79.9, compared with 77.5 a month earlier. A figure of 50 indicates no growth.

Roy Ayliffe, CIPS director of professional practice, says: 'It is great to see that concerns about interest rates rising later in the year have not dampened confidence in the construction industry.'
Workloads have soared as the lower cost of borrowing buoys the housing market and contracts in the public sector boost civil engineering.

CIPS says its overall activity index covering all construction rose for the 38th month to 56.2 last month, from 55.4 in February. The figure is the strongest for eight months and includes strong contributions from all areas of the construction industry.

A third of firms in the housing sector reported that activity was higher in March than in February - three times more than reported a decline.

The rate of expansion of commercial construction activity also grew at the fastest pace since September as one in three firms secured an increased number of contracts during the month.

The strongest expansion was in civil engineering, which grew at the fastest rate since June, 2001, after an increase in contracts from the public sector.

Order books also look healthy, with demand from both the private and public sectors driving the index to 59.8 in March - from 55.5 in February. The survey also recorded a further expansion of the construction sector's workforce, although growth was at a slower rate than overall activity - suggesting that firms were concentrating on raising productivity.

Wilson Welcomes £6.4M Boost to Build on New Ideas in Construction

Construction Minister Brian Wilson recently announced Government funding of £6.4m for 97 new projects designed to promote innovation in the construction industry.

The awards are the outcome of the DTI's, 'Partners In Innovation' (PII) competition. PII supports projects that aim to foster competitiveness and best practice in the industry and encourage new ideas in sustainable development.

Mr Wilson said:
'I welcome this significant level of funding because it will help the construction industry move to a future of increased productivity and better practice through innovation. Business and government have worked together effectively to develop the successful projects. These are exciting schemes which have benefited from industry contributions of £10.4m and Britain's infrastructure will benefit too.'

Partners in Innovation supports projects across a broad spectrum of technical development, from applied research through technology transfer to strategic studies of innovation and emerging issues. PII's emphasis is on delivering sustainable improvements in industry performance and value to construction clients together with a strong focus on the need to turn new ideas into practice.

Mr Wilson added:
'It is particularly encouraging that such a wide range of organisations are involved with PII. There are 43 different lead partners for this year's 97 projects. But this is only the tip of the iceberg. For each project there are usually many more organisations working with the lead partner.'

Secretary of State, Patricia Hewitt, also welcomed the announcement when she spoke at the recent House Builder of the Year Awards. She highlighted projects to be undertaken with the Building Services Research and Information Association and CERAM Building Technology on innovative house building techniques.

ASSOCIATION ENDORSES FAIRCLOUGH VISION

The Construction Products Association welcomed the publication last week of Sir John Fairclough's Review 'Rethinking Construction Innovation and Research'.

The report stressed the importance of the new Strategic Forum in securing improvements in innovation and research, something the Association strongly endorses. Michael Ankers Chief Executive said "This is a highly thought-provoking document that rightly emphasises the importance of the construction industry working together to establish a clear vision and strategic framework which all parts of industry 'buy-in' to. However we would like to see increased emphasis on greater industry integration in addressing research issues, and would urge Government to reserve a larger proportion of its sponsorship funding for projects where the whole of the supply chain are involved."

Although the report failed to underline the role played by manufacturers and suppliers in research and innovation (despite the fact that the products industry traditionally invests more in R&D than the rest of construction combined), the Association welcomed Sir John's conclusion that securing a higher level of investment from the public sector is crucial to raising the level of R&D invested in the construction industry.

CONSTRUCTION ECONOMIC INDICATOR FOR MARCH

Construction economy continued to rally in February as firms report solid growth of new business.
According to the latest CIPS survey, the UK construction economy expanded for the thirty-seventh consecutive month. The Construction Purchasing Managers' Index (PMI) - a seasonally-adjusted indicator designed to provide a single figure snap-shot of construction activity - recorded 55.4 in February up from 54.0 in January, suggesting not only expansion of the economy, but growth at an increased pace. Roy Ayliffe, Director of Professional Practice at the Chartered Institute of Purchasing and Supply, said: "Growth in Commercial activity in February's Construction survey, supports evidence of improvement in Manufacturing in yesterday's PMI, and in Services last month. Although price inflation in the Construction sector is higher than in other sectors, Purchasing Managers are ensuring its not rising too steeply, therefore interest rates could stay unchanged. If interest rates do rise later in the year the knock-on effect could be to dampen growth in house building."

When broken down by sector, the survey revealed that increased activity was widespread. Of the three broad sectors monitored here in February, growth was recorded in each, although it was the Housing sector that continued to lead the overall expansion. Firms in the Housing sector reported that the sustained period of low interest rates has helped to buoy new business, despite rising housing prices.

The seasonally-adjusted Housing Activity Index recorded 56.4 in February compared to 56.9 in January. Meanwhile, robust growth of activity was also reported by firms in the Civil Engineering sector (spurred on, in part, by increased government spending). The seasonally-adjusted Civil Engineering Index recorded 54.7 in February up from 52.6 in January.

Measuring 53.7 in February compared from 53.2 in January, the seasonally-adjusted Commercial Activity Index maintained a stable rate of growth. The index has now signalled expansion of commercial construction activity for the past thirty-eight months, although the rate of growth over that period has generally slowed. Nevertheless, the past three months have seen a modest rebound in activity growth within the sector, and February saw more than a quarter of all those firms surveyed report higher activity at their units than in January.

Underlying the strong growth of overall activity at panel firms in February, was a further sharp rise in incoming new business. Total demand rose for the fortieth consecutive month, and at a pace only marginally down from last month's level. Panel firms again reported being able to close a number of deals which have resulted from a recent upturn in the volume of contracts available for tender. The seasonally-adjusted New Orders Index measured 55.5 in February compared with 56.4 in January.

In line with the latest growth of demand, a number of panellists reported having to expand capacity at their concerns. Growth of construction sector employment picked up in February and, although only modest by recent historic standards, was the sharpest recorded in the past four months. As well as taking on additional staff directly, panel firms reported having to sub-contract work out in February - despite the latest perceived deterioration of such work. The seasonally-adjusted Employment Index measured 53.2 in February compared with 51.1 in January.

With workloads continuing to rise and activity growing at a similar pace, the demand for materials was again reported to have increased. In turn, panel firms reported that a number of suppliers were facing capacity constraints, unable to fulfil rising demand within established lead-times. However, compared to 2000 - when activity levels were significantly higher - the incidence of delivery delays was much less marked.

The seasonally-adjusted Suppliers' Delivery Times Index measured 48.5 in February compared to 47.4 in January.

Supply shortages continued to add to the mounting pressure on the costs faced by panel firms, and the rate of input price inflation was little changed from January's level. The seasonally-adjusted Prices Index recorded 57.4 in February compared to 57.7 in January.

With the latest apparent rebound in new business, panel firms maintained their optimistic opinion regarding future activity levels. Confidence reached an eleven-month high and the majority of survey participants reported the belief that 2002 would see economic recovery throughout many of the major international markets, resulting in a further boost to construction sector business.

HOUSEBUILDING: JANUARY 2002

In January 2002, it is provisionally estimated that 15,700 dwellings were started in Great Britain compared with 15,800 in January 2001. Completions numbered 13,000 compared with 13,600 the previous year. In the latest three months 39,900 dwellings were started, up 7 per cent on the same three months a year ago, while total completions at 41,100 were down 5 per cent. The effects of the weather on starts in late 2000 still affects the comparison with a year ago, both for these figures and the seasonally adjusted figures below.

Seasonally adjusted comparisons:

In the latest three months there were an estimated 47,000 total starts, up 3 per cent on the previous three months, and up 8 per cent compared with the same period a year ago. On the same basis of comparison private enterprise starts were 42,100, at the same level as the previous three months and up 10 per cent compared with a year ago.

Total completions were 40,700 including private enterprise completions of 35,400, up 1 per cent and 2 per cent respectively, comparing the latest three months with the previous three months. Total completions were down 4 per cent and private enterprise completions were down 1 per cent compared with the previous year.

Figures for England show some similar trends to those for Great Britain. Total starts, 37,400 for the last three months, were down 1 per cent on the previous three months and up 6 per cent on the same period a year ago. Total completions, 32,200 for the last three months, were down 1 per cent on the previous three months and down 6 per cent on the same period a year ago.

The next publication date of housebuilding figures will be released Thursday 11 April 2002

Public Enquiries: 020 7944 3000
DTLR website: http://www.dtlr.gov.uk

BRIAN WILSON BACKS CONSTRUCTION BEST PRACTICE PROGRAMME

Construction Minister Brian Wilson today announced that funding for the Construction Best Practice Programme is to be extended for a further year, taking its current funding commitment to March 2004.

Mr Wilson said:
"The impact assessments on the Construction Best Practice Programme show that it has achieved some excellent results for construction businesses. The Programme raised companies' turnover by a combined £132m and annual profits by a total of £71m.

"It is an essential part of the support we are providing for Rethinking Construction and by extending its life to coincide with the other elements of Rethinking Construction we will ensure even closer integration."

Other findings in the recent impact assessment report make reference to the fact that 78% of users feel that the Programme had had some beneficial effect on their organizations.

The decision to extend funding, which comes after Brian Wilson's visit to the Programme's offices in Watford, paves the way for an even greater degree of co-operation between the Construction Best Practice Programme and the other Rethinking Construction initiatives, all of whose funding is now guaranteed until March 2004.

Commenting on the decision, Brian Moone, Director, Construction Best
Practice Programme said:
"To have this measure of support from the Minister is very welcoming and it will certainly assist us a great deal in planning for future activities. It will also mean that we can continue in our role to help industry respond to all of the initiatives under Rethinking Construction and that our support for the Strategic Forum can
continue unhindered".

Set up in 1998, the Programme provides advice and assistance to the construction industry to help improve its business performance.

Services include the provision of a website, a helpdesk, guidance notes, case studies, workshops, mentoring and self-assessment toolkits. Since its inception, more than 20,000 contacts have been registered and there have been over 280,000 web user sessions.

NB: The cost of extending the life of the Programme to March 2004 stands at #2m and will be met by the DTI from within its budget for supporting construction. The Programme also currently receives additional funding of #0.7m, which includes work targeted specifically at SMEs and joint initiatives with other industry bodies such as the Construction Industry Training Board (CITB). A significant amount of industry in kind contribution is also generated though activity such as the network of Construction Best Practice Clubs across the country.

Press Enquiries: 020-7215 5977
(Out of Hours : 0207 215 3234/ 3505)
Public Enquiries: 020-7215 5000
Textphone (for people with hearing impairments): 020-7215 6740
http://www.dti.gov.uk

BRIAN WILSON: BEST VALUE NOT LOWEST COST

Construction Minister Brian Wilson today sent a strong message to local authorities that they must look for best value not lowest cost when judging construction project tenders.

Writing in Municipal Journal Mr Wilson said:

"The obsession with getting the lowest price for construction projects wastes money and cheats local communities. Lowest cost does not mean better value. I want Local Government to lead the way and be champions of best value.

"It is essential for both officials and elected members to understand and act on the culture change which has occurred. The pressure to accept the cheapest tender no longer exists.

"A Bath University survey of 60 completed public sector projects of over #1m in value showed 3/4 were over cost and 2/3 were delivered late. But only one in fourteen clients were dissatisfied. Thirteen out of fourteen people didn't realise there was a better level of service. This isn't good enough. The client is getting the supplier it deserves. A bad client will get a bad supplier. The whole public sector needs to demand more of the industry.

"It is crucial we get construction right. I am looking to local authorities, together with central Government, to help show the way forward and demonstrate real leadership. It is a commitment we must share if we are serious about Best Value."

The DTI's Rethinking Construction initiative is a collection and adaptation of principles and practices that continue to serve other industries well. It has a number of key themes.
- Strong client leadership with a full understanding and appreciation of the people you work with and the wider community.
- Maximising the value of building work by bringing the whole construction team together at the start of the project.
- Continuous improvement.
- Forms of contract that encourage collaboration and co-operation rather than confrontation and litigation.
- Incentives for the supply chain to deliver process and product improvements.
- Measuring performance and sharing information and experience.

Mr Wilson added:
"Lowest price is easy but time and time again it fails to achieve best value. Rethinking Construction presents a challenging agenda for change. The prize is significant. Rethinking Construction Demonstration Projects have consistently outperformed industry averages in terms of cost, time, predictability, defects and accidents.

"Best value not lowest cost. Can you afford not to respond to the challenge of Rethinking Construction?"

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