Government housing targets under more pressure as private sector workloads fall
RICS UK construction market survey, Q2 2008

PR046 

The declining number of residential new build developments is taking its toll on the construction sector with workloads falling at the most dramatic rate for over a decade, says the RICS UK Construction Market Survey published today (2 July 2008).

Construction workloads declined at their fastest pace since Q3 1995 breaking more than 11 years of uninterrupted growth with 19 percent more Chartered Surveyors reporting a fall than a rise. 

The worst performing area by far is the private housing sector, with workloads declining at the fastest rate in the survey’s history (Q2 1994) with 39 per cent more Surveyors reporting a fall than a rise. 

House builders, reacting to the market downturn and the credit crunch, have had no option but to severely limit output, putting the Government target of building three million new homes by 2020 even further out of reach. 240,000 new homes are needed each year to reach this target and with only 175,700 built in 2007, this is now becoming highly unlikely.

The largest workload declines were felt across Wales, Scotland and Northern Ireland. Non-housing workloads fell rapidly, and crucially, workload growth in public commercial construction also turned negative.

Some sectors are still reporting small levels of growth such as infrastructure, with one percent more respondents reporting a rise than a fall (a drop of 11 per cent compared with Q1) and private industrial, with four percent reporting a rise than a fall (a drop of 12 per cent compared with Q1).

Prospects for the next twelve months do not provide much ground for optimism either, with confidence in workloads reaching the lowest levels in the survey’s history and employment levels turning negative. In addition, profit expectations continue to decline and are becoming increasingly negative. This depressed pattern of continuous decline is visible across all survey indicators.

RICS senior economist David Stubbs said:

“Up until now we have been seeing growth in the construction industry slowing down; however these figures show that workloads are actually falling in almost every sector. This decline can be attributed to the lack of availability of debt finances and the fall in prices, which is taking its toll on developers. If this pattern continues then the industry will have to start making significant cut backs. This downturn will also have a negative effect on housing targets, which will not be achieved at current levels of output.”

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:

Claire Barratt
Press Officer
RICS Corporate Communications
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