Vote of confidence for small construction firms
Small and medium-sized housebuilders have received a vote of confidence from Prime Minister David Cameron.
The government has revealed plans to directly commission the building of more than 13,000 new homes on five publicly-owned sites and is committed to awarding the contracts to smaller construction firms.
In his New Year message, the Conservative Party leader said he will “kick-start the building of thousands of homes in a return to 1980s-style projects like the Docklands development”.
“Nothing like this has been done on this scale in three decades – government rolling its sleeves up and directly getting homes built,” he announced.
The Prime Minister says the first wave of directly-commissioned developments on brownfield sites in London and south-east England will start this year because they already have planning permission.
The government has also pledged £1.2bn to help developers detoxify more brownfield land so it can be used for housebuilding.
This will allow 60,000 more homes to be built over the next five years, according to Downing Street.
This commitment to housebuilding is expected to further boost the construction sector, which ended last year on a robust note.
According to the latest purchasing managers’ survey, commercial construction remained the best-performing subcategory, with housing activity also increasing at a solid rate, albeit slower than the highs seen in 2014.
Hiring also bounced back, with subcontractor use rising at its fastest pace since August 2014.
Just over half of the purchasing managers on the Markit/CIPS survey panel anticipate a rise in business activity in 2016.
Respondents cited greater client budgets, improving economic conditions and a strong pipeline of projects as underpinning their confidence.
However, rising costs could have an impact on the construction sector over the next 12 months.
London is the most expensive city in Europe and the second most expensive city worldwide in which to build, according to the latest International Construction Costs Index.
The Index reports that the cost for the construction of a five-star hotel in London is 20% above that in Paris and 50% higher than in Dubai.
The report analyses the relative costs of construction across 44 major cities and has ranked New York as the world’s most expensive place to build closely followed by London, while Bangalore and Taipei are the cheapest.
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