Our look at 2016 small developers
The construction sector is still recovering from the 2008 global crisis, though construction activity has been improving in recent years. In fact, a boom in construction took place in 2015, and this continued into 2016.
Both commercial and residential activity have been strong into this year. And that, inevitably, brings us to Brexit.
The EU referendum on June 23rd this year has caused economic uncertainty. The construction sector, like the property sector, does not respond well to this. If the economy slows or falls into recession (and a possible recession was forecast by some in June/July), then construction investment can be brought to an abrupt halt.
The vote to leave the EU has led to a weakening of the pound sterling (October saw the pound drop to its lowest level for 30 years). As a result, the input costs for construction companies increase. In addition, many materials used in the construction industry are imported from abroad. This will make it harder for small developers to thrive.
Another issue for the construction industry as a result of the EU vote is a potential worsening of the shortage of skilled workers. As members of the EU, the right to free movement makes it easy for construction companies to hire skilled workers from countries across the EU. The inability to hire workers from abroad may make projects more costly for companies.
However, the industry expects support measures will be announced in the Chancellor's Autumn Statement on November 23rd. Hammond is expected to set aside a £3billion house building fund for small and medium-sized developers, which will allow developers to benefit from cheap loans.
The property market is groaning for better housing supply, but according to official figures from the Office for National Statistics, output in the construction sector fell 1.1.% in the third quarter when compared with the previous quarter. These months, from July to September, account for the months immediately after the Brexit vote. This is its weakest performance since the same quarter in 2012.
So Brexit has had an impact, but from our perspective it's been a good year for the construction industry. Better outcomes have come about than was forecast, work is still being committed to, and we have a range of major residential housing projects in the pipeline. The housing shortage, which is a key issue for the government, means that there is still potential for small builders and small developers to secure new projects.
Small developers were hit by the financial crisis in 2008, and many were bought out by larger companies. One solution to the current housing shortage is for small developers to make a smaller number of homes at a time. Prefabs are to be built to help the issue, while the Chancellor's Autumn Statement should include measures which encourage banks to lend to small developers.
So despite general uncertainty, we predict a good future for small developers, while the need for skips on construction sites will continue.
We meet the skip hire needs of residential customers, small developers, small to medium-sized builders and larger construction companies across the UK. Providing a speedy and reliable skip hire service, we will also recycle your waste. We can make things easy for you. Contact us today.