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Construction sector skills shortage blamed for holding back housebuilding Construction sector skills shortage blamed for holding back housebuilding
(about 1 hour later)
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. A lack of skilled workers, such as joiners and bricklayers, is holding back house building after the government’s Help to Buy initiative boosted demand for new homes, Britain’s biggest housebuilding firm has said.
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, Persimmon 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 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.” The head of Persimmon, 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 former 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 because they already had 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. The industry has long complained of skill shortages in areas such as carpentry, bricklaying and plastering. During the recession, housebuilders laid off thousands of workers, bricklayers’ pay plummeted to as little as £35 a day and many went abroad or got different jobs.
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. Like other housebuilders, Persimmon said the market was returning to normal after Help to Buy prompted a 45% surge in sales last summer. This summer was quieter but has been followed by the usual pick-up in autumn as people return from holiday to go house-hunting.
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. Help to Buy is a mortgage guarantee scheme that enables buyers, mainly first-timers, to purchase a new-build home with a smaller deposit. For example, Fairburn said, buyers could 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.
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. Persimmon is increasing 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 them up, are faster to build and have brick cladding so they look like traditional bricks-and-mortar homes. Annual production could rise to 8,000 and beyond in the next few years.
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.”
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.
Fairburn was sanguine about the prospect of interest rate increases next year. He noted that people were currently spending 27% of their disposable incomes on paying off their mortgage, so interest rates could go up by 2.5% before the long-term average of 36% was reached.
There is mounting evidence that the housing market is cooling, and a survey showed on Tuesday that activity in Britain’s construction sector slowed to a five-month low in October. Housebuilding grew at the slowest pace in a year.
Analysts were not concerned, however. Chris Williamson, chief economist at Markit, which compiles the data, said: “It merely indicates a cooling of growth from the super-strong pace seen in prior months. 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.”