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More Residential Units Being Awarded in the UK

In February the UK’s residential sector experienced a large increase in the number of contracts being awarded for residential unit construction, reaching the highest total since Barbour ABI began recording these figures.

The total number of units awarded in February was 14,455, a figure calculated from a three-month rolling average. In total, the residential sector witnessed an 8.6% increase compared to the month before and is 49.5% higher than February 2014, which is proof positive of a strong start to the year.

Based on a three-month rolling average, project value for the residential contracts awarded climbed 1.1% between the months of January and February and were 1.8% higher than the numbers reported in February 2014.

These results demonstrate the ongoing resiliency in the residential sector, which looks set to continue leading the construction industry throughout 2015.

Sector Performance

Nationwide’s house price indices for February revealed that on average, property values are going up by 5.7% annually, which is a decrease from the January total of 6.8%. This was the sixth month in a row that property price growth slowed down since a peak of 11.7% in June 2014.

Although the Halifax reported that annual house prices rose by 8.3% in February (down from a January total of 8.5%), figures from the Bank of England confirmed that there were 60,786 mortgage approvals in January, up from 60,349 at the end of 2014. However, this higher figure is still lower than the six-month average of 61,666.

 

Specialists in Construction Insurance

House builders continue to demonstrate strong performance, with Taylor Wimpey reporting a 2014 profit of £450 million, which is an impressive 68% increase.

Projects by Region

London accounts for 20.2% of the value of contracts awarded in March, making it the primary location of activity in the residential sector. Its leading position this month is fortified by big-win contracts such as the Gasholder location at the Battersea Nine Elms project, which is valued at £80 million and will see over 800 flats constructed as part of a regeneration project for the area. Another lucrative contract awarded in London in March was the Blackhorse Lane development. Located in Walthamstow, it is valued at around £60 million and includes 483 residential flats and 519 student accommodations.

After London, the West Midlands had the highest percentage of contract award value at 11.9%, a 4.2% increase over February 2014. A major contributor to this distinction was the £40 million contract to build 400 new homes in Nuneaton.

Project Types

Private housing projects accounted for the majority of residential sector contracts awarded in the month of March.They represented 80% of the total value, an increase of 8% over March 2014. After private housing, the most successful project category was local authority projects, which received 6% of the total value awarded, an increase of 3% from the previous year.

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