Construction workloads in the UK were negative in Q3 driven by a drop in housebuilding and the uncertain economic climate, according to the latest Royal Institution of Chartered Surveyors (RICS) UK Construction Monitor.
A net balance of -10% of respondents reported a decrease in activity in Q3 – the most downbeat result since the early months of the pandemic.
Infrastructure (net balance of +10% in Q3 vs +17% in Q2) and public works (+8% in Q3 vs +14% Q2) are still growing although both sectors are now experiencing a slowdown in activity.
All other segments are now seeing a fall with the most extreme fall experienced in the private housebuilding sector where the net balance has dropped from -12% in Q2 to -26%.
A net balance of +38% of respondents report that the credit environment is becoming more restrictive, and two thirds of contributors view finance as limiting current activity.
Only around one third of respondents anticipate an increase in productivity over the course of the next year.
Sam Rees, senior public affairs officer at RICS, said: “The latest reported drop in housebuilding highlights the urgency to launch a structured, holistic plan for tackling the housing crisis. While the government’s recently announced intention to meet its target of one million new homes before the end of this parliament is laudable, detail on how this will be achieved is still missing.
“The RICS Manifesto for the Built Environment sets out a comprehensive and ambitious housing delivery strategy that focuses on local needs, skills investment and the creation of new homes through building and conversions, incorporating crucial planning reforms and innovations.”
RICS chief economist, Simon Rubinsohn, added: “The tougher environment around the housing market is now coming through in terms of a slowing in the build out rate of new developments according to feedback from RICS members. This suggests that housing supply is likely to fall at least for the next year compounding the problems already being faced by many of those looking to get a first step on the property ladder or move into the rental market. In contrast, the trend in infrastructure work is still positive albeit less so than previously.
“Chiming with growing concerns about the rising level of insolvencies in the sector, the survey also highlights the tougher credit environment being faced by many developers. Significantly, financial constraints are now viewed as the major challenge by the industry.”
