UK: The time has now come for the government to deliver on its housebuilding initiatives with construction levels continuing to fall in the three months to September, says the latest RICS Construction Market Survey.
Levels of both public and private housebuilding continued to drop during the last quarter, as pressure continues to mount on the government to ensure rapidly growing demand is met. A net balance of eleven percent more chartered surveyors reported decreases in public sector housing workloads, while four percent more respondents stated that private sector projects had also fallen rather than risen.
Meanwhile, overall construction workloads were once again flat. The sector has now failed to see any significant growth in almost five years and the industry will be hoping that the recently announced £50 billion stimulus package will go some way to boosting badly needed development.
Across Great Britain, all areas failed to see any significant growth with the exception of the Midlands, where overall workload readings reached their highest level since early 2010 (net balance +10 percent).
Perhaps unsurprisingly, construction firms saw their margins continue to deteriorate last quarter, with revenue failing to keep pace with growing costs. However, in spite of this, a renewed optimism swept the sector as a net balance of ten percent more surveyors expect margins to stabilise off the back of potentially growing workloads. This is the first positive reading since late 2007 and suggests that a cautious optimism may be slowly returning to the market.
Furthermore, with optimism edging upwards in terms of future workloads and margins, so too did expectations for employment levels in the sector. 25 percent more surveyors expect an increase rather than a decrease in jobs for construction workers over the coming twelve months.
Simon Rubinsohn, RICS Chief Economist, commented: “Without doubt, housebuilding is continuing to struggle and last quarter was predictably difficult for construction firms. The government’s £50 billion stimulus package will hopefully deliver a much needed shot in the arm for the sector, but we would like to have seen a greater level of investment in housing. Not only would this provide relatively swift economic returns but it would also go some way to alleviating the pressure on the country’s worryingly low supply of homes.
“However, with the raft of measures recently put in place by the government, it appears that there is some optimism that things could improve over the next twelve months in terms of workloads, profits and jobs. If this comes to pass, it will be an extremely welcome lift for both the construction sector and the wider economy.”
