Despite the Government promising to deliver 200,000 new homes by 2020, our latest UK Construction Market Survey has revealed that growth in the private housing sector slowed down considerably during the first quarter of 2016.

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At a glance:

  • Despite Government commitments to sector, UK construction market looks set to slow
  • Slowdown in rate of construction workload-growth over past three months
  • Private housing sector hit hard as workloads rise at the slowest pace since 2013
  • Growth waning despite Government committing to new infrastructure and building programmes

Main sectors

Private housing workloads rose at their slowest pace since Q2 2013, with only 36% more of those working in the sector reported a rise in growth rather than a fall over the first quarter of 2016. During the first quarter of 2015 that figure was close to 50%.

Across all sectors, our UK Construction Market Survey shows that while 33% more respondents saw workloads rise rather than fall during the last quarter of 2015, this figure dropped by five per cent over the past three months.

Expectations

Confidence in the outlook for the sector also dropped with the number of construction professionals saying that they expected to see workloads rise over the next 12 month outweighing those expecting a fall by 55%. This is a considerable decrease on expectations from this time last year when 79% more respondents expected to see workloads rise.

Meanwhile, following 4% employment growth in 2015, respondents foresee headcounts continuing to rise over the coming 12 months with a net balance of 41% expecting growth, and a rise of 2% forecast, on average.

Comments (2)

  1. The view from RICS

    On the surface, it might seem surprising that we are witnessing a slowdown in the construction sector just a few months after hearing the Chancellor’s ‘We Are The Builders’ speech, given the Government’s significant commitment to this sector. One might well ask why growth in private housing workloads is softening at a time when policy is firmly focussed on the creation of new starter homes. We have long held the view that starter homes cannot be the only solution. There is an issue around the availability of land on which new houses can be built, and we would like to see more being done to free up private brownfield sites.

    Our survey tells us that planning delays are one of the biggest barriers to growth in the construction sector. We have recommended that councils work together to create a team of emergency planners who can parachute into boroughs that are experiencing significant delays, therefore reducing a major growth barrier.

    That said, we cannot discount the climate of uncertainty caused by the forthcoming EU referendum. We know that a range of sectors have been affected by these issues as investors look to delay any decisions until a final outcome has been determined, and construction is no exception.

    Simon Rubinsohn

    Simon Rubinsohn, RICS Chief Economist 19 April at 15:54PM

  1. A major issue here, that has gone largely unreported, is that the local authorities have successfully challenged the ministerial statements on the number of affordable houses that reduces the number from 12 (sic) to none. Therefore all schemes, no matter what size are subject to the affordable housing provision. All local authorities are now requiring 20 % of the selling value as a contribution with all legal fees paid by the developer/owner and with the money paid upfront. Small developments are being cancelled and this will have a major adverse affect on the number of new homes being built which is against the governments wishes

    William Cowap William Cowap, 25 April at 14:46PM

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