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| Construction sector skills shortage blamed for holding back housebuilding | Construction sector skills shortage blamed for holding back housebuilding |
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| Persimmon, Britain’s biggest housebuilder, said a lack of key workers such as joiners and bricklayers is holding back building after the government’s Help to Buy initiative whipped up demand for new houses. | Persimmon, Britain’s biggest housebuilder, said a lack of key workers such as joiners and bricklayers is holding back building after the government’s Help to Buy initiative whipped up demand for new houses. |
| Despite shortages of skilled workers and planning delays, the company expects to build almost 20% more homes than last year, between 13,000 and 13,500 – a similar growth rate to 2013 when Help to Buy gave a huge boost to the housebuilding industry. The scheme accounts for 40% of Persimmon’s house sales. The company is now fully sold up for 2014 and there is only limited further stock available. | Despite shortages of skilled workers and planning delays, the company expects to build almost 20% more homes than last year, between 13,000 and 13,500 – a similar growth rate to 2013 when Help to Buy gave a huge boost to the housebuilding industry. The scheme accounts for 40% of Persimmon’s house sales. The company is now fully sold up for 2014 and there is only limited further stock available. |
| Persimmon boss Jeff Fairburn 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.” | Persimmon boss Jeff Fairburn 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.” |
| To plug gaps, the company has started training ex-military personnel along with school-leavers. Fairburn said it could take on about 200 ex-forces people a year, with the training taking half as long as a traditional three-year apprenticeship, as they already have some basic skills. | To plug gaps, the company has started training ex-military personnel along with school-leavers. Fairburn said it could take on about 200 ex-forces people a year, with the training taking half as long as a traditional three-year apprenticeship, as they already have some basic skills. |
| Like other housebuilders, Persimmon said the market is returning to normality after Help to Buy prompted a 45% surge in sales last summer. This summer has been quieter followed by the usual pick-up in the autumn as people return from holiday to go house-hunting. The mortgage guarantee scheme enables buyers, mainly first-timers, to purchase a newbuild home with a smaller deposit. As an example, buyers can get a 2.29% interest rate, which would translate into weekly mortgage payments of £140 for a £150,000 house on a 25-year mortgage, Fairburn said. | |
| Persimmon is also ramping up production of timber-frame houses at its Space4 factory near Birmingham, by 30% to 5,500. The prefabricated houses don’t require bricklayers to put up and are faster to build. They don’t look any different from traditional bricks-and-mortar homes because Persimmon adds cladding. Annual production could rise to 8,000 and beyond in the next few years. | Persimmon is also ramping up production of timber-frame houses at its Space4 factory near Birmingham, by 30% to 5,500. The prefabricated houses don’t require bricklayers to put up and are faster to build. They don’t look any different from traditional bricks-and-mortar homes because Persimmon adds cladding. Annual production could rise to 8,000 and beyond in the next few years. |
| Fairburn was sanguine about the prospect of interest rate increases next year. He noted that people are currently spending 27% of their disposable incomes on paying off their mortgage, compared with a long-term average of 36%, so interest rates could go up by 2.5% before we get to the long-term average. | Fairburn was sanguine about the prospect of interest rate increases next year. He noted that people are currently spending 27% of their disposable incomes on paying off their mortgage, compared with a long-term average of 36%, so interest rates could go up by 2.5% before we get to the long-term average. |
| There is mounting evidence that the housing market is cooling, and a survey showed on Tuesday that activity in the construction sector slowed to a five-month low in October. Housebuilding grew at the slowest pace in a year. | There is mounting evidence that the housing market is cooling, and a survey showed on Tuesday that activity in the construction sector slowed to a five-month low in October. Housebuilding grew at the slowest pace in a year. |
| Analysts were not concerned, however, with comments from Chris Williamson at Markit, which compiles the data. Williamson said: “It merely indicates a cooling of growth from the super-strong pace seen in prior months.” | Analysts were not concerned, however, with comments from Chris Williamson at Markit, which compiles the data. Williamson said: “It merely indicates a cooling of growth from the super-strong pace seen in prior months.” |
| He added: “Although only representing around 6-7% of GDP, the pace of expansion signalled by the survey therefore suggests the construction sector will again provide a strong contribution to the economy in the fourth quarter, both in terms of boosting GDP and generating jobs.” | He added: “Although only representing around 6-7% of GDP, the pace of expansion signalled by the survey therefore suggests the construction sector will again provide a strong contribution to the economy in the fourth quarter, both in terms of boosting GDP and generating jobs.” |
| City analysts are predicting an annual operating profit of £456m for Persimmon, up from last year’s £333m. | City analysts are predicting an annual operating profit of £456m for Persimmon, up from last year’s £333m. |