Building work in east falls to lowest level since 2008/9 crash
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Labour shortages and difficulties sourcing materials have caused construction workloads across the East of England to fall to their lowest levels since the financial crash of 2008/9, according to a survey.
A Royal Institution of Chartered Surveyors (RICS) study found these and lack of finance – including local authority spending – hit the industry during the second quarter of the year when lockdown was in place.
Government intervention had benefited infrastructure, it said, but East of England construction needed “a little more attention”.
RICS chief economist Simon Rubinsohn said the weak second quarter survey was “only to be expected” given the impact of the pandemic on the construction sector.
But more ominously, the industry was still “fairly cautious” in its predictions for the future – apart from the infrastructure sector which should benefit from recent government initiatives, he said.
A loosening of planning rules including around Permitted Development Rights should provide a boost to private housebuilding, he said.
RICS suggested new land classification of “Amberfield” – or “land ready to go” - to address a number of industry concerns.
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Four fifth of those surveyed said projects had been put hold across the UK with only 23% of contributors believing that projects which are currently on hold were likely to restart imminently. Anecdotal evidence suggested some projects were re-tendering due to costs.
With council spending declining in the second quarter, the East of England saw public housing workloads fall to their lowest level since survey records began and other public works dipped to levels not seen since 2011.
Despite a government commitment to infrastructure and housing projects, there was a decline in infrastructure workloads with 9% more contributors reporting a fall as opposed to a rise during the period.
Private housing workloads also tumbled to their lowest level since the fourth quarter of 2009.
The RICS market confidence indicator – a composite measure of workloads, employment and profit margins expectation for the coming 12 months – slipped lower. Profit margins are expected to decline in the year ahead with a net balance of -36% of contributors anticipating a fall, said RICS.
But looking to the year ahead, regional respondents were more optimistic as they anticipated growth in workloads, particularly in public and private housing sectors.