House prices: Expert discusses 'interesting' pricing differences
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Construction has bounced back since the end of lockdown with developers reporting surging ambitions for new projects. In a trading update this week, developer Peabody announced it had started construction on more than double the number of homes for the first half of this financial year compared to last. Reporting figures for the six months to end of September this year, Brickability, which distributes a range of construction materials, announced performance had been well ahead of the the same period in 2019 pre-Covid. The firm has seen revenue soar 197 percent on last year with gross profits also up 146.8 percent.
The company’s chair John Richards predicted: “The fundamentals of the UK house building market remain strong and the industry is forecast to continue to grow substantially as we move into 2022, driven by increased demand in the private sector and Government investment into affordable housing starting to come through.”
The Government has signalled ambitions for greater house building in the year ahead.
In the Autumn, Budget Chancellor Rishi Sunak unveiled £24billion of investment to fund 180,000 affordable homes and bring more brownfield land into use.
Shortages of building materials have posed a threat to the construction boom, with the Brick Development Association warning demand is expected to remain high with lead times continuing to be an issue.
In a recent statement, the Construction Leadership Council warned that, although “UK manufacturers remain at full production capacity, demand continues to outstrip supply for certain products, particularly those being imported.”
Brickability’s chief executive Alan J Simpson said: “Whilst the first half of the year has presented industry wide challenges particularly, product availability and logistics, performance across the bricks division has been very positive and is expected to continue to provide good results as we move into the second half.”
Brickability has also seen expansion having acquired leading timber supplier Taylor Maxwell.
Timber has also suffered from significant shortages as demand took off post-lockdown.
In the year to July prices for timber soared 64 percent.
Mr Richards added: “The acquisition of Taylor Maxwell completed in June 2021 brings significant scale and diversity to our offering and customer base, alongside the acquisition of Leadcraft Ltd.
“We are pleased to report that both businesses are already contributing significantly to the overall performance of the Group.”
Brickability has announced an interim dividend of 0.96p per share with share prices up over two percent on today’s results.
Although the construction industry has ramped up significantly this year, supply of new homes coming to market is still struggling to keep pace with demand though maintaining high prices.
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Data from Zoopla this week found demand for houses up 19 percent on the five year average.
Meanwhile, the flow of new homes coming to market was down 21 percent on the same period.
Nationwide’s House Price Index today found house price growth for November at 10 percent.
Robert Gardner, Nationwide’s Chief Economist, said: “The number of housing transactions so far this year has already exceeded the number recorded in 2020 with two months still to go and is actually tracking close to the number seen at the same stage in 2007.”
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