Partner Article

Bleak outlook for regions construction industry

Spending cuts in Q2 have hit public sector construction workloads, according to the latest RICS Construction Market Survey.

During the three months up to June, 19 percent more chartered surveyors reported that levels of public housing construction fell rather than rose, and public works construction fell from a net balance of -17 percent to -36 percent.

Michael Henning, RICS construction spokesperson for the North East said: “Although government interventions, such as the new enterprise zones, are welcome they are unlikely to have any tangible effect for some months if not years.

“Similarly, while the new National Planning Policy Framework promises to improve our highly complex, costly and time consuming planning system, it is difficult to see how the construction situation will improve unless banks begin to lend and the private sector finds new and innovative ways to boost the market.”

The private sector has also been hit, with 10 percent of surveyors reporting a fall in housing construction levels. However, private commercial workloads have stabilised with a net balance of zero.

It has also been widely reported that the competitive tendering environment and a lack of funding remain major issues for many construction firms.

Michael added: “Longer term, we can only hope that as demand and costs continue to rise in London and the South East, areas such as ours will become ever more competitive and begin to attract new investors.”

Profit expectations are now set to deteriorate reflecting the pressure on margins as input costs rise, with the net balance falling to -50 percent.

This was posted in Bdaily's Members' News section by Ruth Mitchell .