Yorkshire construction and infrastructure sectors builds on growth

Yorkshire and the Humber’s property sector saw construction workloads grow in the last quarter of 2018, according to the RICS Construction and Infrastructure Market Survey.

During the last quarter of the year, growth in workloads on infrastructure projects increased as 38% more respondents reported a rise in this activity (up from 22% in Q3 2018).

This was followed by private housing, with 29% of contributors reporting an increase in workloads (up from 26% in Q3 2018). 23% of the region’s construction professionals also saw a rise in workloads for public housing (up from 19% in Q3 2018).

However, workloads on private commercial projects fell during Q4 2018, with only 9% of respondents reporting a rise in such activity (down from 36% in Q3 2018). Workloads on private industrial projects also fell during the last quarter of the year with 10% seeing an increase in activity, down from 23% in Q3 2018.

The survey’s findings suggest that the housing market slowdown, along with ongoing Brexit concerns, is affecting business investment decisions. When asked how business enquiries for new projects or contracts have fared in the past three months, 10% more respondents reported an increase in enquiries, rather than a decrease, compared to 24% in Q3.

Respondents also cited obtaining investment as a major obstacle, with 78% of surveyors identifying financial constraints as the most significant impediment to building. When asked how credit conditions have changed over the past three months, 20% more respondents reported a deterioration rather than improvement.

Looking further ahead, tender price expectations over the next twelve months are expected to drop with 51% and 40% more respondents envisaging greater price pressures in the building and civil engineering areas.

Nonetheless, 25% more contributors in Yorkshire and Humber expect activity to rise rather than fall over the next 12-months (down from 32% in Q3), and a net balance of 18% foresee an increase in hiring over the next 12 months.

Jeffrey Matsu, RICS Senior Economist commented: “The additional £1 billion in additional HRA borrowing to fund council housing has begun to stimulate activity. The subsequent scrapping of the cap in last year’s Budget has the potential to accelerate this positive trend in the public sector over the coming years.

“Capacity remains an ongoing constraint for activity more broadly. However, with surveyors reporting a ramping up of new hiring even despite a moderation in business enquiries, continued access to a qualified pool of non-UK workers to support this growth will be as important as ever, particularly for work on construction sites.”