Government spending cuts and a lack of commercial finance have taken their toll on construction workloads in the South West, new figures reveal.
According to the Royal Institution of Chartered Surveyors (RICS), public housing and other public sector building were hardest hit, with the private sector not yet replacing the spare capacity created.
RICS’ latest quarterly construction market survey shows in the South West the private commercial sector managed to remain in positive territory, growing by five per cent, although surveyors said this appears to be more indicative of the sector bottoming out, rather than a sustained recovery.
The market in the region has also become increasingly competitive, with firms seeking to secure work from a smaller and diminishing pool. As a result, surveyors predict that jobs will continue to be lost, with nine per cent more respondents expecting employment levels to fall rather than rise over the next 12 months. Surveyors were similarly downbeat with predictions for workloads and profit margins (-27 and -41 respectively).
Across the UK material costs rose dramatically with 56 per cent more surveyors reporting a rise in costs, up from 28 per cent during the previous three months. Tradespeople and professional costs fell, reflecting increased competition for jobs, which is driving down labour costs. However, in the South West, this was insufficient to offset the rise in commodity prices and, as a result, the total input costs net balance climbed from +9 to +36.
Martin Giles, of Carter Jonas’ Swindon office said there had been a lack of direction on the economy by Government and the financial situation is still very insecure and uncertain.
Christopher Varey of Beaufort Ellis Associates in Swindon added that there is a bleak outlook generally for 12-18 months with a fear that boom and bust will return.
Andrew Covell, RICS South West spokesman, said: “The rebound in the construction sector seems to have run out of steam. Although bad weather at the end of the year clearly had some impact on responses to the survey, the bigger picture here is of an industry under significant pressure as public spending cuts begin to bite, while there is little sign of a private sector recovery across large parts of the country.
“Ominously for the housing market and medium-term house prices, residential development is not at this point being cranked up to meet projected demand.”
