Construction workload has fallen in Q3 following a drop in housebuilding and economic challenges, according to the latest report from the RICS UK Construction Monitor
The latest report from the Royal Institution of Chartered Surveyors (RICS) UK Construction Monitor has revealed that construction workload has fallen, with a net balance of -10% of respondents reporting a decrease in activity for Q3. This is the lowest result since the beginning of the pandemic.
The infrastructure and public works sector has continued to grow but has slowed, with a growth rate of 10%, compared to 17% in Q2; however, all other sectors have declined.
Construction workload has fallen across most sectors
The most significant decrease is in private housebuilding, where the net balance has gone from -12 % to 26%. This decline can be attributed to slower sales and more competitive pricing.
Public housing, private industrial, and private commercial workloads have also decreased. New business inquiries across the sector have also turned negative, from – +6% in Q2 to -2% in Q3.
The new economic policy introduced over the summer has led to +38% of respondents reporting that the credit environment is becoming more restrictive. Two-thirds of participants said the UK’s current financial citation was limiting activity.
Many participants also said that demand is impacting business plans. Demand has been steadily increasing and is now at its highest level since early 2020.
As construction workload falls, recruitment has also decreased significantly. Over half of the participants surveyed mentioned this issue. Around 40% of respondents cited difficulties hiring bricklayers, carpenters, plumbers, and electricians.
Stakeholders are not hopeful of a change in fortunes
There is also a problematic shortage of quantity, with only around half of the feedback received to this question highlighting a shortage of qualified professionals to take up roles. Only a third of respondents anticipate an upturn in productivity over the course of the next year.
“The tougher environment around the housing market is now coming through in terms of a slowing in the build-out rate of new developments according to feedback from RICS members,” said RICS chief economist Simon Rubinsohn.
“This suggests that housing supply is likely to fall at least for the next year, compounding the problems already being faced by many of those looking to get a first step on the property ladder or move into the rental market. In contrast, the trend in infrastructure work is still positive, albeit less so than previously,” he concluded.
