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HOUSING MARKET CHANGES DASH SOUTH WEST’S HOPES FOR A “HOMES CRISIS” SOLUTION

House building? Not when construction outlook is worst for a decade - RICS UK construction market survey, Q1 2008

Public sector housing delivery in the South West is the lowest in the UK, despite the region having the country‘s biggest housing crisis.

Private housing delivery in the South West has also slipped significantly, despite the region having the biggest affordability gap between average earnings and average house-prices, and the biggest gap between housing supply and demand.

These are the top-line findings of the latest RICS Construction Market Survey, tracking activity in the first quarter of 2008.

A slowing housing market has hit the UK construction industry, making it even more unlikely that the Government will reach its housing targets, according to RICS (the Royal Institution of Chartered Surveyors).

The latest RICS survey also reveals that construction industry employment expectations in the South West are the lowest in the UK.

Growth in construction workloads fell to the lowest level for more than a decade, as house builders and businesses were hit by the effects of the credit crunch, and completed house-sales fell away. Workloads fell to the worst level since 1996 with 1 percent more Chartered Surveyors reporting a rise than a fall, down from 16 percent in the fourth quarter of 2007.

Nationally, the worst hit sector was private housing, with workload growth in this sector turning negative for the first time since 1999. The fall is due mainly to a downturn in the North, but private housing weakened in all regions and is now static in London and the South East, Wales, the Midlands and Northern Ireland. 9 percent more Chartered Surveyors reported a fall than a rise in private sector housing workloads down from the positive figure of 16 percent.

Expectations for profit margins fell for only the second time in the survey‘s history with surveyor sentiment falling sharply, as growth in the private commercial and private housing sectors slowed. Equally, confidence that workloads will increase has fallen for the fifth consecutive quarter, falling below the survey‘s long run average.

However, skill shortages have equalled the record low set in 2006, as the industry continues to employ labour from EU accession countries. The UK‘s open and flexible labour market continues to provide a firm base for the industry in a period of economic stability.

Matthew McKaig, RICS Director for the West, said:  “Growth in the construction industry has slowed abruptly in the first quarter of this year. Private residential workloads are now shrinking as home builders react to challenging conditions in the housing market by reducing the number of new homes under construction. This emphasizes the difficulty that the government will have in encouraging higher house building levels during periods when the housing market is soft.

“RICS engagement with the South West Housing Initiative – the voluntary partnership of the region‘s biggest house-builders, housing associations, housing professions, and employers – underlines this region‘s dire housing crisis.  These new finding underline the need to press for the delivery of more, and more affordable, homes in the South West”, said Mr McKaig.

ENDS              1st April 2008

For further information please contact Violet Ridge, Sturgess Van Damme, on 01275 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.