Construction outlook makes government housing targets unlikely

RICS UK construction market survey, Q4 2007

PR006

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 2008).

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.

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.

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.

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

For more information:

Stephen Thornton

Senior Press Officer

RICS Corporate Communications

T:  +44 020 7695 1682

M:  +44 07969 177150