Housing boom spikes construction work up to highest in seven years
A new survey has revealed that the scope for growth within the housing construction sector has increased significantly since January 2009, showing very real signs of gradual recovery. Confidence among UK construction firms is the highest it has been in seven years, thanks to the growth experienced in the house building industry and the steady increase of house prices.
With the average house price rising at 9.5% a year (as reported in the latest Nationwide house price index study) the housing market appears to be very much pushing the economy onwards and upwards.
The data, which was released by Markit/CIPS, revealed that the construction industry has seen a strong growth; specifically, in the area of residential house construction.
In addition, employment rates within the construction industry have continued to rise thanks to the increase of work required for new projects.
Whilst the UK construction output remains at 10% less than its previous high, this growth is already showing signs of promise.
Speaking of the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing and Supply said: “UK construction activity has shown signs of moderation from the steep growth seen at the start of the year; but strong expansion in new business and improving economic conditions reflected particularly well on business optimism and outlook for the year ahead.
Importantly, this was supported by a sharp increase in employment levels, an indication that this latest upturn will continue to expand.
Residential house building has been leading the way with activity in May, still buoyant on the back of stronger new work and investment spending. In conjunction with a strong expansion of civil engineering activity, these performances were able to offset to a certain degree this month’s slower growth in commercial activity.”
Supply and Demand
With the increase of work and employment within the construction industry comes the requirement for more vehicles used in building projects. This has seen an increased stress on supply chains and sub-contractors. The gap is currently being filled with short-term vehicle rental, picking up the slack, but also allowing for flexibility over and above long-term leasing options. With short-term rental firms can more effectively react to any stutters or fluctuations in growth. And because renting is more cost effective than leasing, it is expected that the rental industry will grow further.
David Brennan, the CEO of Nexus Vehicle Rental, explains that it is necessary to have both a flexible supply chain structure, as well as robust management software that can cope with the demands placed upon it by the construction industry.
“Having a supply chain that allows you to draw from a numerous different vehicle types, as well as suppliers is crucial when accommodating the fluctuating demand of the construction industry.”
“Incorporating options that allow businesses to customise long term vehicle rentals with features such as tow bars, tail lifts and bespoke branding within your proposition will also allow rental firms to provide a valid alternative to long-term leasing.”
The inability to acquire new or replacement vehicles could obviously have a negative impact upon the profitability and timescale of a construction project. Brennan explains why it is vital that fleet managers have access to the real time availability of rental vehicles.
“Vehicles used during construction projects are often hired on the spot, in response to breakdowns, new staff lead-in vehicles or increased staffing on build projects. Offering a no contract service means that vehicles are highly accessible and your offering is flexible enough to meet the future demand of the construction industry.”
“In addition providing software, such as our IRIS platform, that allows users to book online or on mobile and have the vehicles delivered to site within 2 hours, helps fleet managers deal with the need for unexpected additions to the fleet.”
With the wider construction industry accounting for around 6% of the economy, economists remain hopeful the sector will continue to remain robust.
