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Industry plans to grow despite challenges - Lloyds

Industry plans to grow despite challenges - Lloyds

1st November 2016

 Housebuilders are forecasting increased growth and investment in the sector despite the uncertainty following the EU vote and ongoing challenges with skills and planning.

The second annual Lloyds Bank Commercial Banking report on the UK housebuilding sector analyses the state of the industry today and the opportunities and challenges it faces in the future.

The report is the first in-depth study of the sector since the Brexit vote and more than a third of firms surveyed (36%) said that the uncertainty following the EU referendum result is the biggest challenge to their business. However the industry is relatively optimistic and is planning to grow, invest and create jobs.

The research found that optimism about the future of the housebuilding industry has picked up slightly from 7.1 last year to 7.2 in 2016, where 10 represents the highest level of expectation.

This outlook has given the industry the confidence to invest, with average five year investment plans up 17% year on year.

Housebuilders are also confident about growth, with 42% of respondents saying that their growth forecasts had improved since the EU vote, compared with 27% who said they had declined. They are now predicting an average growth of 28% over the next five years, up from 25% last year.

Almost a third (30%) of firms said there are not enough skilled workers in the industry, with bricklayers, electricians, plumbers and joiners being the hardest to recruit. Perhaps surprisingly, this shows a slight improvement from the 2015 survey from 35%.

Recruitment and skills remain a focus, with three of the top priorities for firms over the next five years being recruiting additional staff (52%), and investing in training (49%) and apprenticeships (32%).

A quarter of firms are planning to create jobs to support growth, but this is down from 31% last year. And the scale of planned workforce growth has also fallen back to 22%, from an average of 31% of the current workforce over five years in 2015.

Despite the fall in plans to recruit, the sector still looks set to create more than 70,000 jobs over the next five years.

The remaining challenges that the sector highlighted include the rising cost of materials (35%) and the current planning system (29%).

Pete Flockhart, head of housebuilders, commercial banking, Lloyds Bank, said: “Given the challenges that housebuilders face, the sector is painting a relatively optimistic picture, with improved growth and investment forecasts compared with last year’s survey.
“The wider uncertainty, coupled with the rising cost of materials, presents some challenges but the industry is taking steps to tackle these issues head on, and still plans to grow.

“Businesses are confronting the much-mooted skills shortage and it is encouraging to see that almost half of the industry is making staff training a key focus and nearly a third is prioritising apprenticeships.”

Stewart Baseley, executive chairman of the Home Builders Federation, said: “The industry is pushing the skills agenda hard. If we are to build more high quality homes we simply have to increase industry capacity. We are looking at how we build our individual sites more quickly; and the measures government could introduce to allow SME builders to play their part in delivering more homes. 
“If we can continue to create an environment in which the industry can grow, as well as delivering desperately needed new homes, we can play a huge part in driving our economy forward.”

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