South West construction sector more resilient than elsewhere in UK

The South West construction sector remained more resilient than elsewhere in the UK despite pressures linked to financial constraints, planning challenges, and Brexit uncertainty, according to figures from the Q3 RICS (Royal Institution of Chartered Surveyors) Construction & Infrastructure Market Survey.

18% more respondents in the South West reported an increase in construction workloads in Q3, up from a 14% net balance the previous quarter. Of all the UK regions, only Scotland recorded a higher net balance.

Relative to other sectors of the South West construction industry, workloads in public housing grew at the fastest pace, followed by infrastructure and other public works.

Meanwhile, workloads in the region’s private housing sector grew in Q3 according to a net balance of +11% of respondents, whilst commercial and industrial activity was flat.

Looking to the year ahead, construction activity in the area is expected to be most resilient in the private housing sector with 29% more South West surveyors anticipating activity to rise rather than fall. However, surveyors in the region remain relatively cautious about the overall outlook, with a net balance of 10% expecting construction workloads to be higher next year.

Obstacles to growth cited by respondents in Q3 included access to finance, which continues to be amongst the biggest impediment to building activity in the South West (cited by 62% of respondents). Respondents pointed to planning and regulation as the biggest obstacle (cited by 70%). Anecdotally, local respondents also continue to cite Brexit uncertainty as a limiting factor.

Neil Brierley, RICS Construction Spokesman and Regional Managing Director at Currie & Brown says:

“House-building activity – both public and private – remains the key bright spot in the construction sector in terms of activity. Rising workloads are also evident in infrastructure and other public works, according to surveyors which is positive as we seek to create a more balanced and competitive economy for the long-term. Investment in industrial, logistics and commercial property also remains strong despite the uncertainty surrounding Brexit, which is most encouraging. Looking ahead, whilst respondents remain cautious about the outlook, this has the potential to materially improve if greater certainty can be achieved in the wider economy and the government authorises more spending in the next spending review.”

Hew Edgar, RICS Head of Government Affairs, adds:

“The UK’s construction sector has shown resilience in its contribution to the economy over a difficult decade. We are, however, at a national level seeing issues such as financial constraints, skills shortages, stagnant productivity, variable quality, output lagging behind target, and slim margins.

“Whilst not the panacea to resolve all these problems, offsite manufacture and modern methods of construction (MMC) represent an opportunity to address many of these issues, and we therefore welcome the establishment of a Champion for MMC.

“MMC can supplement existing capacities, support alternative models for delivery (AMD), increase delivery rates while reducing energy use in the development process. We firmly believe that once fully embraced and embedded, MMC will improve our capacity to assist housing demand.

“We urge the future Government to support MMC both directly through investment and indirectly through encouraging and incentivising construction of further MMC factories in areas of high unemployment as part of the Industrial Strategy and strengthening its presumption in favour of MMC in public infrastructure schemes”.