Looking forward: Three numbers that might have significance for 2011

Looking forward: Three numbers that might have significance for 2011

The future for construction in the year ahead looks uncertain at best, bloody awful at worst.

So I thought I would pick some numbers released in 2010 that might say something about the path of change that awaits construction, housing and property in 2011.

I could have picked a host of numbers, but to spare you boredom here are just three.

Mortgage rates

Looking at the figures from the Council of Mortgage Lenders on mortgage rates is a sobering experience – even at this time of year.

The average rate of mortgage interest on outstanding loans dropped to a low in October of 3.51%. That’s the lowest rate on the CML’s data sheet and I suspect you’d be hard pushed to find a rate lower than that since home buying came into the reach of ordinary folk.

Good news you might think.

Well no.

In the five years before the credit crunch the average rate was 5.34% on my calculation. And let us not forget that those rates are regarded as having been low and part and parcel of the financial muddle we are now grappling to get out of.

I think the question we need to ask ourselves is: “How many people can afford to see their mortgage interest payments rise by 50%?”

That would just about take us back to those low pre-credit-crunch rates.

Put another way, every 1% rise in mortgage will cost the nation’s mortgage payers about £10 billion a year. A 2% rise, which must be expected within the next few years and maybe sooner than we think, will add £20 billion to mortgage payers’ bills. That is more or less on a par with the effect of the VAT rise.

Quantity surveyors on the dole

You’ll be hard pushed to find anyone with a casual view of what might happen to employment in construction over the coming months.

The big question I am waiting to see answered is when will the recent upswing in employment within construction give way to a fall?

If we follow the lot of quantity surveyors it can give a bit of an early warning signal to the rest of the construction industry of what might be in store.

So, if we check the official data for how many quantity surveyors there are signing on we see 900 in November. This was a rise from 890 in October. But what is significant is that this was the first rise in the number of claimants since the start of 2010 after a consistent series of falls.

Across the industry as a whole we see in November that the number of claimants with construction related job went up.

So is this the start of the next phase of rising unemployment for construction folk?

Internet sales

Data on internet sales may seem a bit odd to include, but I don’t think so.

One question on this subject has been in my mind for some time: When will internet sales represent a significant proportion of total retail sales?

A second question has been: What might this mean for construction and property management?

Well the first question was answered in December when the retail sales figures for November showed internet sales topped 10% of all sales for the first time. 10% seems like a significant proportion to me, particularly given that the figure has grown over the previous 12 months by more than a third.

If this pace of change continues, even at a much reduced rate, with this amount of internet sales we now see we might expect to see sales from traditional shops falling as online takes an ever increasing market share.

Clearly the pattern of change will be mixed, but the implications for construction firms are potentially huge and not all negative.

Firstly traditional retailing will almost inevitably change to respond to the surge in online sales. These changes might be competitive where online retailing poses a threat, or complementary where online is part of the retailer’s portfolio along with physical shops.

From a purely self-interested perspective, change should be good for construction firms, especially those engaged in fit-out.

That said if the result of this competition between shop-based and online retailing is that there is a need for less shop-floor area, this would probably be to the detriment of more traditional construction within the retail sector.

Then again, as the retail environment adapts to change there will be opportunities for construction firms, both consultants and contractors, to work with the retailers to create new models of distribution and refresh the design and perhaps the function of shops within the built environment.

One to watch? I think so.

2 thoughts on “Looking forward: Three numbers that might have significance for 2011

  1. I would agree And there is a growing concern that a large nr of surveyors are and have been unemployed for more than 6 months who would be classed as senior to management. Due to this they are looking to change there career as they see no long term future in the construction industry, larger proportions of senior qs are also looking at canada and Australia as ther looks to be longer term employment in these countries than the uk, which looks to be in further declining need of qs and pqs in the coming 4- 5 years. This will create a massive skills gap between intermediate and senior surveyors but they believe that although they have to spend Years at college and university to qualify there is no long term future as a construction surveyor in the UK
    Sept 2011

  2. calling all newly trained surveyors and and seniors the future is australia and canada money is better and future is brighter need by demand and there is little or none in the UK

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