New build home numbers could drop below 100,000 next year, warns RICS

RICS UK construction market survey, Q3 2008 

The Government’s housing target of building two million new homes by 2016 is looking further out of reach with the downturn in the construction industry sending growth in private housing workloads to a record low, says the RICS UK Construction Market Survey published today (6 October 2008).

Following significant declines over the past two quarters, private housing sector workloads plummeted yet again, with 60 percent more Surveyors reporting a fall than a rise. 

The Government needs to build in excess of 200,000 new homes each year in order to reach their target of 2 million homes by 2016.  To date, only 66,220 new homes have been built in 2008, with a fall below 25,000 per quarter likely by the end of the year. 

RICS Senior Economist Oliver Gilmartin said: “With finance for projects becoming increasingly difficult to obtain, the Government’s ambitious target of 2 million new houses a year by 2016 is likely to fall well short. At current levels of production the number of new homes built will fall below 100,000 in the coming year.

Overall construction workloads declined at their fastest pace in the survey’s 14 year history with 38 percent more Chartered Surveyors reporting a fall than a rise.  Adding to this gloom, 41 percent more Chartered Surveyors expect workloads to fall rather than rise over the coming twelve months as financial constraints continue to bite.

In a survey first, construction workloads across all sectors are now in decline with Private Industrial and Infrastructure (the only two sectors still recording positive net balances last quarter) now in negative territory. 

As a result the effect of the credit crunch is increasing as large scale public projects also come under financial pressure, with the very real possibility that core projects will struggle to obtain the necessary funding and may have to be either delayed or scaled back. 

Gilmartin continued: “The outlook for the construction industry is extremely bleak with the previously strong infrastructure sector now unlikely to step in as the downturn in property markets resonates. A rapid solution to the log jam in credit markets is necessary to limit the severity of the current downturn which is starting to affect the country’s infrastructure”

London added further woe to Private Commercial workloads with the capital showing declines for the first time since the onset of the credit crunch.  All other regions saw the pace of decline in commercial activity accelerating with tenant demand for commercial office space sitting at record lows. 

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 86,000 chartered members (FRICS and MRICS) and 55,000 members in other categories of membership (TechRICS, trainees and students) globally.

It represents, regulates and promotes the work of these 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:

Claire Barratt
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RICS Corporate Communications
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