London builders 'bouncing back from recession'

Surveys have shown London and the South East bouncing back from recession much more quickly than the rest of the country, as a lack of homes supports house prices while the jobs market remains more resilient to looming public-sector cuts.

Figures from building society Nationwide have highlighted that London is the only area of the country not to have suffered annual falls in house prices during the second quarter of this year, and they are now just 2% below their 2007 peak.

Construction firms have meanwhile been buoyed by the Olympic building programme and major infrastructure schemes such as Crossrail, and are competing fiercely for work in a tough London office market.

Morgan Sindall today claimed a share of a major £1.2 billion building programme at Gatwick airport over the next four years today, delivering new terminal facilities, aircraft piers and baggage systems as well as new retail, security and immigration areas for Global Infrastructure Partners. The latest win comes on the back of nearly £300 million in Crossrail tunnelling and station contracts so far this year at Whitechapel and Liverpool Street.

The firm flagged up an "improving commercial sector, particularly in London", and expects office fit-out work to strengthen further in the capital over the year ahead.

Rival fit-out firm Interior Services Group also saw signs of improving private-sector demand in the South East and a "very good year" for its London team. This has been driven by a revival in demand from banks and insurers for new office space which has seen revenues jump 40% year on year.

Housebuilder Galliford Try added today that it was able to trim back sales incentives for new buyers in its southern-centred business "significantly".

Galliford, which has ramped up its building operations following a rights issue nearly two years ago, saw completions rise 21% to 2170 in the year to June and says margins will be boosted by sites bought cheaply when land values were lower.

Rival builder Persimmon said today that sales had increased 6% since April in an improving housing market, and it plans to open another 70 sales sites in the second half of the year.