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Housebuilding slump pushes UK construction to five-month low

Housebuilding in the UK, which came to a halt during the financial crisis, then recovered strongly after 2012, has fallen to its lowest point for a year.

This has had the effect of pushing UK construction activity to a five-month low, according to a report by The Markit/CIPS Construction Purchasing Managers’ Index. 

One factor in the slowdown is a lack of skilled workers. Jeff Fairburn, chief executive of Persimmon, said: "Because all the developers are pushing hard there’s going to be a squeeze on skills – bricklayers, joiners and the like. All of the trades are affected. We are not building quite as fast as we’d like to." 

Tim Moore, the author of the report, said: "Housebuilding activity still increased at a strong pace overall, but the sharp growth slowdown since this summer reflects greater caution towards new development projects amid tighter mortgage lending conditions. 

"Despite signs that the housebuilding recovery has lost some intensity, UK construction companies remain highly upbeat about their overall prospects for growth." 

David Noble, Group Chief Executive at the Chartered Institute of Procurement & Supply, said: "It appears that the euphoria of the past few months is now settling down to a slightly more modest level of expansion, although delivery times continue to lengthen and suppliers of raw materials are in high demand, making the completion of construction projects more challenging and showing how the number of available suppliers has not yet reached pre-recession levels." 

Despite the cooling of the residential sector, demand for new housing is still strong, due in part to the government’s "help to buy" scheme which increased sales 45% last year. 

Read the full report here.

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