Construction work in east plummets as crisis continues to hit sector

The construction sector in the east is still down in the dumps, according to a RICS industry survey

The construction sector in the east is still down in the dumps, according to a RICS industry survey Picture: GETTY IMAGES - Credit: Getty Images/iStockphoto

Construction workloads in the East of England have fallen again in the last quarter, according to experts.

The Royal Institution of Chartered Surveyors (RICS) said from July to September workloads fell for another quarter – with a net balance of a -10% drop across all types of projects – as the industry grapples with the economic effects of the coronavirus pandemic.

It sees infrastructure and private housing leading the recovery over the next year with growth expected from upcoming projects.

Workloads across all building sectors fell by a net balance of -10% during the period – but this was less severe than the previous fall of -32% in the second quarter, according to its poll of professional surveyors.

MORE – Developers celebrate West Suffolk’s ‘biggest warehouse deal’“However, when compared with last year’s industry average of +13% it shows construction in the east is far from full recovery,” said RICS.

Workloads fell the most across the private commercial and infrastructure categories, with net balances of -22% and -12% respectively, it found.

They also fell across the private housing and other public works – but to a lesser degree.

Public housing saw a net balance of +22% reporting a pick-up in activity following declines in the second quarter and there was little change in workloads in private industrial.

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Financial constraints including a deterioration in credit conditions and shortages of materials were blamed, along with insufficient demand.

However, looking ahead, 39% more respondents expect infrastructure workloads to rise rather than fall in the coming year, closely followed by the private housing sector – offering a glimmer of hope to the industry.

Anticipated changes to the planning system, an extension to Help to Buy and a stamp duty holiday were all expected to revive activity.

Despite fewer respondents reporting a fall in the number of new business enquiries across the East, profit margins are expected to decline over the next 12 months with a net balance of -16% of respondents expecting a fall.

RICS chief economist Simon Rubinsohn, RICS Chief Economist, said with a new lockdown now under way, these were “very challenging” times for the economy.

“The government’s commitment to delivering on its infrastructure programme provides a ray of light with the survey pointing towards a solid increase in workloads over the next twelve months which could play an important role in helping to drive a wider recovery in business activity,” he said.

“The private residential sector is also expected to see solid growth aided by the various policy initiatives that are still in play. However, commercial development is anticipated as being flatter in the face of the structural pressures facing both offices and retail.”