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WORKLOADS GROW IN THE SOUTH WEST

RICS UK construction market survey, Q4 2007

A slowing housing market has dampened confidence in the profit outlook of the UK construction industry, making it even more unlikely that the Government will reach its housing targets, says the RICS Construction Market Survey published today (24 January 2007).

Growth in construction workloads eased back in the fourth quarter as house builders and businesses were hit by the effects of the credit crunch and demand for housing fell away. 16 percent more Chartered Surveyors reported a rise than a fall in the fourth quarter, down from 17 percent in quarter three. Meanwhile, new enquiries for housing grew at the slowest pace since 2006. 

In the South West, however, workload growth accelerated in the fourth quarter.  Private commercial workload continued to grow rapidly as did private housing workloads, both of which accelerated.  Workloads were stable in the infrastructure sector and grew modestly in the private industrial sector.

The outlook for profit remains gloomy with surveyors continuing to expect below average profit margins. Equally, confidence that workloads will increase has fallen for the fourth consecutive quarter, although it remains above the survey‘s long run average.

Respondents in the South West remain positive about future workloads but are downbeat on both the employment and profits picture. 

However, skill shortages remain low as the industry continues to employ labour from EU accession countries with the UK‘s open and flexible labour market providing a firm base for the industry in a period of economic stability.

Skills shortages in the South West were stable in the fourth quarter, well below the survey‘s long run average.

Sentiment across the country varied. The construction industry in Scotland outperformed other regions with workloads experiencing eight quarters of rapid growth.

Chartered Surveyors from across the South West reported on their specific area:

Douglas Cawley of Douglas Cawley & Associates in St Ives, Cornwall said: “HIPs is having a negative effect on the housing market.  Purchasers do not trust it as it is supplied by the vendors.”

Simon Large of Magna Partnership Ltd in Cirencester, Gloucestershire said:  “The signs in the wider economy of economic slow down- higher interest rates and stock market jitters- have not yet fed through to the construction market.  I would expect slow down to become evident within the next six months.”

Christopher Varey of Beaufort Ellis Associates in Swindon, Wiltshire said: “Housing down (flats).  2008 orders slow to firm up in all sectors.”

RICS senior economist David Stubbs said:

“A slowing housing and commercial property market, following the credit crunch and the Northern Rock turmoil have started to hit the construction sector. Current financial instability is rocking market sentiment and may see the industry enter a period of uncertainty. Doubts are likely to intensify over the ability of the Government to meet its ambitious house building targets. Indeed, it is worth noting that new housing starts have already begun to stagnate in recent quarters.”

 

ENDS             24th January 2008

 

For further information please contact Violet Ridge, Sturgess Van Damme, on 0275 349011 or email violet@sturgessvandamme.co.uk

 

About RICS

RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 140,000 members globally and represents, regulates and promotes the work of property professionals throughout 146 countries. RICS is governed by a Royal Charter approved by Parliament which requires it to act in the public interest. It is also a professional regulatory body approved by Government (HM Treasury).

RICS construction market survey
Published quarterly, the RICS Construction Market Survey provides a unique look at this £80bn industry in the UK.  It features trends in house building activity, labour availability, expected profit margins and publicly-funded building infrastructure projects.