SW construction market bucks national slowdown trend

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Authored by Mary
Posted: Wednesday, April 20, 2016 - 20:54

The latest survey by the Royal Institution of Chartered Surveyors (RICS) has revealed that growth in the construction market has remained positive in the South West over the last three months.

Private housing workloads showed the greatest increase with 48% more of those working in the sector reporting a rise in activity rather than a fall over the first quarter of 2016. During the last quarter of 2015 that figure was 28%.

Nationally private housing workloads rose at their slowest pace since Q2 2013, with only 36 per cent more of those working in the sector reporting a rise in growth rather than a fall over the first quarter of 2016.

Across all sectors in the South West the RICS UK Construction Market Survey shows that 32% more respondents saw workloads rise rather than fall during the first quarter of 2016 up from 24% in the last quarter of 2015.

However, growth has slowed compared with Q1 2015 when net balances of 68% of respondents saw increased workloads in private housing and 43% saw increases across all sectors.

Public sector housing workloads remain broadly static with just 4% more respondents reporting an increase in workloads rather than a decrease. While this is an improvement over the last quarter of 2015 when 10% more saw a decrease rather than an increase in workloads it is no change from Q1 2015.

Reports of skills shortages have increased slightly with 59% of respondents citing a shortage in Quantity Surveyors (up from 57% last quarter) and 41% reporting a shortage of blue collar workers (up from 38% last quarter).

However, despite the short term growth in the South West confidence in the outlook for the year ahead has dropped relative to this period last year with the number of construction professionals saying that they expect to see workloads rise over the next 12 months outweighing those expecting a fall by 55 per cent. This is a considerable decrease on expectations from Q1 2015 when 83 per cent more respondents expected to see workloads rise rather than fall.

Respondents foresee headcounts continuing to rise over the coming 12 months with a net balance of 42% expecting growth. This is up from 36% last quarter but down from 59% this time last year.

RICS Chief Economist, Simon Rubinsohn, said, “On the surface, it might seem surprising that we are witnessing a slowdown in the construction sector just a few months after hearing the Chancellor’s ‘We Are The Builders’ speech and given the Government’s significant commitment to this sector. One might well ask why growth in private housing workloads is softening at a time when policy is firmly focussed on the creation of new starter homes. We have long held the view that starter homes cannot be the only solution.

There is an issue around the availability of land on which new houses can be built and we would like to see more being done to free up private brownfield sites.

“Our survey tells us that planning delays are one of the biggest barriers to growth in the construction sector. We have recommended that councils work together to create a team of emergency planners who can parachute into boroughs that are experiencing significant delays, therefore reducing a major growth barrier.
“That said, we cannot discount the climate of uncertainty caused by the forthcoming EU referendum. We know that a range of sectors have been affected by these issues as investors look to delay any decisions until a final outcome has been determined and construction is no exception.”

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