Simon Rubinsohn, RICS Chief Economist.
Nick Hill

Yorkshire’s construction market slows down as confidence in the sector falls

Despite the Government promising to deliver 200,000 new homes by 2020, the private housing sector in Yorkshire and Humber slowed down during the first quarter of 2016, claims a survey by the Royal Institution of Chartered Surveyors (RICS).

Only 45% of those working in Yorkshire and Humber’s private housing sector reported a rise in growth rather than a fall over the first quarter of 2016, compared with 50% in the last quarter of 2015.

Across all sectors, the RICS UK Construction Market Survey showed that only 34% of Yorkshire and Humber’s construction professionals saw workloads rise, rather than fall, compared with 43% the same time last year.

The survey also revealed that confidence in the outlook for the region’s construction sector has dropped, with only 38% of respondents expecting workloads to increase over the coming 12 months.

This is a considerable decrease on expectations from this time last year when 75% more of Yorkshire and Humber’s construction workers expected to see workloads rise.

Simon Rubinsohn, RICS Chief Economist, 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, 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.“

Meanwhile, following 4% employment growth in 2015, respondents foresee headcounts continuing to rise in Yorkshire and Humber over the coming 12 months with a net balance of 30% more of the region’s construction professionals expecting growth.

Christopher Greenwood, MRICS of NPS Group in Yorkshire and Humber, commented: “As a region, we have previously received a relatively generous share of development monies. But uncertainty over Great Britain being in the EU has apparently led to some projects being put on hold, pending the outcome.“

Paul Walker, MRICS of Twoplustwo Commercial Services Limited in York, added: “There is a pipeline of infrastructure works on the horizon that require the necessary approvals to allow them to be released and delivered.“

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