UK construction “balanced between property boom and capacity crunch”

The UK construction industry has grown for the 15th consecutive month, and at the fastest pace for 11 years. At the same time, job creation increased by the greatest amount since records began in 1997.

The market is being propelled by a property boom: house prices are thought to have risen 10% in the past 12 months. However, the Chartered Institute of Purchasing & Supply warned that growth could soon be choked off by a tightening labour market and the "sharpest deterioration in the quality of subcontracted work since 1999".

Vince Clancy, the chief executive of programme manager Turner & Townsend told GCR that the contracting sector in particular had "rightsized" for the recession, but that it was already hard for clients to find a firm to undertake large projects in the capital. 

Tim Moore, an economist at Markit in London, said the industry had done well to meet the growth in demand. He said: "Construction companies have performed impressively so far this summer. The sector is enjoying its strongest cyclical upswing since the global financial crisis." Markit have said that the growth in homebuilding is due to "favourable funding conditions and strong demand for new housing starts".

The government has tried to encourage demand in the housing sector by offering equity loans and mortgage guarantees for home buyers.

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