Midlands remains the engine of growth in the UK construction sector

THE Midlands remains the engine of growth in the UK construction sector according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Market Survey.
 
While the majority of UK construction sectors are experiencing a slowdown in growth, as Brexit uncertainty continues to cause concern, the region continues to surpass the majority of the UK regions in all areas apart from public housing.  
This quarter, 30% more chartered surveyors reported that construction workloads across the region had risen rather than fallen. Whilst the West Midlands recorded the strongest reading across the UK this is a significant slowdown on the trend growth that the region has experienced in the last three years.
 
Private housing continues to be the key driver of construction growth across the region with 43% more chartered surveyors reporting a rise in workloads this quarter. Growth in the region’s private commercial and infrastructure sectors also surpasses that of other UK regions/countries with 24% and 30% more surveyors reporting workload increases rather than decreases in these areas respectively.
 
A lack of skilled professionals still remains a big factor across the region this quarter with two thirds of respondents citing the need for more quantity surveyors and other construction professionals to complete projects.

Just like Q2, financial constraints remain the most significant impediment to growth, anecdotally linked to uncertainty, with 64% of contributors reporting such constraints to be holding back growth. Planning and regulatory delays are also impacting on activity in the region with 59% of respondents citing problems in this area.
 
Growth in output prices rose at a more moderate pace this quarter with a net balance of 25% of West Midlands chartered surveyors seeing a rise rather than a fall. Input costs continued to increase too this quarter with a net balance of 44% of respondents reporting a rise.
 
The outlook for the year ahead has improved following the initial shock of the vote to leave the EU with 52% more contributors expecting their workloads to rise rather than fall over the coming 12 months, up from 31% in Q2. Employment expectations have also improved in Q3 with 40% more respondents expecting a rise rather than a fall over the year to come.
 
Andy Irvine, of Cushman & Wakefield, Birmingham, said: “The fallout from Brexit still creates uncertainty and whilst sentiment is probably better in the region than expected, we do not know the full impact Article 50 will have. Markets don’t like uncertainty.”
 
Simon Rubinsohn, RICS Chief Economist, added: “Whilst nationally the picture painted by the Q3 survey is one of subdued growth, the Midlands holds its position of relative strength. Whilst anecdotal evidence from respondents suggests that uncertainty remains following the vote to leave the EU, the majority of sectors across the region continue to outperform the rest of the UK.”
 
Jeremy Blackburn, RICS UK Head of Policy, said: “It seems that when it comes to private housing, we are indeed the builders. The Government’s commitment to this critical sector has clearly had a positive impact on growth. However, what the figures mask, is the disparity between the kinds of properties that are being built.  When the Communities Secretary publishes his Housing White Paper later this month, he must deliver a housing programme that benefits more than the just the fortunate few. We need to shift the rhetoric away from home ownership and encourage the building of affordable rental properties in the suburbs and our cities.
 
“While the Midland’s Engine – driven by high speed rail programmes – is building up steam, we expect the Chancellor to initiate a wave of smaller infrastructure schemes, whether new build, repair or upgrade, across the transport network.  As the UK prepares for the changes ahead, the ability to move people, goods and services more effectively will be vital and we expect locational investment in road, rail, air and sea ports.   Government must continue to reassure and encourage investors in the coming months so that improvements to UK infrastructure can continue.”