Signs housing is on firmer footing as Barratt wins £10m contract

Barratt East Scotland will build 81 homes as part of a masterplan for 610 houses and flats in the village of Kirkliston.

The Home Scotland project, near Edinburgh Airport, will secure existing employment and create more than 90 jobs.

Barratt East Scotland’s managing director, Douglas McLeod, said: “We have worked closely with Home Scotland on this project and look forward to a successful partnership.”

News of the deal came as Markit/Cips published its purchasing managers’ index (PMI) survey for the construction sector, showing modest growth for November.

The index, in which a reading above 50 represents expansion, declined to 52.3, from a five-month high of 53.9 in October.

The continuing expansion was driven by a rise in new business received in November, the survey revealed, as construction firms recorded more contract wins, but further progress was held back by a slowdown in commercial-based activity.

Housebuilding ended five months of decline and grew in the month, while civil engineering output was broadly unchanged.

The survey follows Thursday’s manufacturing PMI, in which activity in the sector fell to 47.6 in November, fuelling fears that the economy could already be contracting.

Howard Archer, chief European and UK economist at IHS Global Insight, said the modest growth in construction activity did little to dilute fears that the economy could contract in the fourth quarter.

He said: “The construction sector is clearly far from racing ahead and it faces an extremely challenging environment, which threatens to seriously limit activity over the coming months.

“In particular, the government’s public spending cuts are limiting overall expenditure on public buildings, schools and hospitals. On top of this, house building activity is likely to be constrained by persistently weak housing market activity, soft prices and a worrisome outlook.”

Archer said that if the economy continued to struggle markedly over the coming months, construction activity could be hit “increasingly hard” by projects being put on hold or cancelled. But he said there was some good news for the construction sector, as it stands to benefit from the UK government’s measures to boost infrastructure, outlined in this week’s Autumn Statement.

The government is also looking to boost house-building by instructing departments to release state-owned land to be built on under a “build now, pay later” scheme.

The UK government has also announced a £400m “get Britain building” investment fund aimed at reviving stalled house-building projects.