Private housing booms amid construction slowdown

While the majority of UK construction sectors are experiencing a slowdown in growth, chartered surveyors reported a surge in workloads for private housing in the third quarter of the year.

Private housing saw the highest levels of growth compared to other construction sectors, with 27% more chartered surveyors reporting workloads had risen rather than fallen, according to the latest RICS Construction Market Survey.

Overall, 19% more chartered surveyors reported that construction workloads in the UK had risen, rather than fallen this quarter; however, this is a significant slowdown on the trend growth over the previous three years – the lowest reading since Q2 2013.

“It seems that when it comes to private housing, we are indeed the builders,” said Jeremy Blackburn, RICS UK Head of Policy. “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.”

Looking further ahead, while respondents highlighted generally subdued growth over Q3 they are more optimistic about the year to come with 49% more respondents forecasting a rise in workloads rather than a fall. On average, contributors expect activity to rise by 2.5% over the next twelve months.

Expectations for employment growth have also improved with 35% more respondents forecasting a rise rather than a fall, up from 18% in Q2.

However, both workload and employment expectations are still lower than pre-Q2 levels and anecdotal evidence from respondents suggests that uncertainty relating of the UK’s future relationship with Europe is still causing them concern regarding their future workloads.

In Q3, financial constraints remain the most significant impediment to growth, anecdotally linked to uncertainty, with 69% of contributors reporting such constraints to be holding back growth. Planning and regulatory delays are the next most substantial factor with 55% of respondents citing problems in this area.

Growth in output costs rose at a more moderate pace with a net balance of 28% of contributors seeing a rise rather than a fall over the quarter. Meanwhile, input cost continued to increase firmly with a net balance of 48% of respondents reporting a rise.

“The picture painted by the Q3 survey is one of subdued growth, and although expectations have improved following the immediate shock of the vote to leave the EU, anecdotal evidence from respondents suggests that much uncertainty still remains on the outlook for the year ahead,” said Simon Rubinsohn, RICS Chief Economist.”