{"id":139264,"date":"2024-05-02T00:01:36","date_gmt":"2024-05-01T23:01:36","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=139264"},"modified":"2024-05-01T14:50:11","modified_gmt":"2024-05-01T13:50:11","slug":"uk-construction-sector-stabilises-with-housing-growth-on-the-horizon","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/uk-construction-sector-stabilises-with-housing-growth-on-the-horizon\/139264\/","title":{"rendered":"UK construction sector stabilises with housing growth on the horizon\u00a0"},"content":{"rendered":"

Cautious optimism was observed in the UK construction sector by RICS, ahead of antipated reductions in base rates and steadying inflation<\/h2>\n

The Royal Institution of Chartered Surveyors (RICS) latest UK Construction Monitor for Q1 2024<\/a>, shows a slightly more optimistic picture of the market this time round, supported by an overall improved economy.<\/p>\n

However, despite some positive results, the general sentiment from survey respondents still airs on the side of caution.<\/p>\n

The headline net balance for workloads (which captures total activity for the whole of the construction sector) returned a net balance reading of 0 (up from -8 in Q4) marking the first non-negative reading since Q1 of 2023.<\/p>\n

Infrastructure remains the strongest performing sub sector, with a net balance of +17% of respondents reporting a rise in workloads (up from +9% in Q4).<\/p>\n

Private and infrastructure are going strong, according to respondents<\/h3>\n

Workload expectations across the UK construction sector picked up noticeably in Q1, with a net balance of +24% of respondents now anticipating a positive trend in total construction activity over the next year (improved from a reading of +12% in Q4).<\/p>\n

At a sector level, private residential workloads are seen recovering over the coming twelve months by a net balance of +23% of respondents (up from +5% in Q4.).<\/p>\n

The outlook also appears to be brightening for the private commercial sector, with a positive shift in the twelve-month expectations net balance to +23% from +13% in Q4.<\/p>\n

Expectations remain solid<\/a> across infrastructure (net balance +31%). Looking at employment trends moving\u00a0forward, a net balance of +21% of survey participants foresee industry headcounts rising (marginally higher than +20% in Q4).<\/p>\n

Softening credit conditions are helping build confidence in the UK construction sector<\/h3>\n

The prospect of cuts in base rates later this year, together with steadying inflation, looks to have fed through into the feedback for credit conditions this quarter.<\/p>\n

Evidenced by the three-month credit conditions outlook indicator moving out of the negative zone in Q1, recording a net balance of +2% (up from -14 %in Q4 and the first positive reading for this measure since the question was first included in the survey in 2018).<\/p>\n

Furthermore, the\u00a0twelve-month credit conditions outlook also increased from a net balance of +11% in Q4 to +22%.<\/p>\n

Financial constraints remain the largest barrier across the sector<\/h3>\n

Despite improving sentiment around credit conditions, for the third consecutive quarter\u00a0 +63% of respondents cited financial constraints as the most significant barrier to market activity, highlighting the persistence of this issue.<\/p>\n

The next most widely referenced obstacle was planning and regulation, with +55% of respondents pointing to the current system as hindering activity.<\/p>\n

While general labour shortages remain a concern<\/a>, the proportion of respondents citing this issue has stabilised to +44% which is the lowest reading since Q1 of 2021.<\/p>\n

RICS senior public affairs officer, Robert Toomey, commented: \u201cIt is notable, but unsurprising, that planning and regulation has come back as the main obstacle impacting the construction sector, with challenges, including resource and capacity, a lack of up to date local plans and political uncertainty.<\/p>\n

\u201cTo ensure we move away from a fractious planning system, to a more holistic approach, we call for a comprehensive plan to meet the UK\u2019s housing and infrastructure needs, covering adequate allocation of serviceable development land and land value sharing related to the needs arising from the development; improving the speed, capacity and efficiency of the planning system and an evidence-led review of existing Green Belt policy.\u201d<\/p>\n

Residential figures are encouraging- but still fall short of targets<\/h3>\n

Simon Rubinsohn, chief economist at RICS, commented: \u201cThe more upbeat expectations for the residential segment is particularly encouraging given the sharp fall in supply over the last year or so but, to put this in some context, the latest reading is not indicative of a return to even previous development numbers let alone reaching the goal of 300,000 units per annum.<\/p>\n

\u201cAlthough there is a little more optimism about a likely easing in credit conditions towards the back end of this year, financial constraints currently continue to be perceived as the major challenge facing the industry. Alongside this, even with the flat trend in output, difficulties in sourcing sufficient quantities of skilled labour are still being highlighted.<\/p>\n

“This points to a more fundamental problem for the construction sector if it is to deliver on a range of ambitious goals from housing to infrastructure to retrofitting the existing stock of real estate\u201d.<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

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