Better news predicted for UK

By Sandy Guthrie09 January 2013

The UK construction market could turn a corner this year, albeit only in first gear, according to the latest RICS (Royal Institution of Chartered Surveyors) construction market survey, which found UK chartered surveyors predicting output to increase in 2013.

During the last quarter, 15% more surveyors across the UK reported that they expected workloads to grow over the coming 12 months, although RICS admitted that this followed what had been a horrendous year for the sector.

The upturn is reflected in the small increase in reported workloads in the final three months of 2012. Over this period, a net balance of 6% more respondents indicated that activity had increased, with the most substantial gains being seen in infrastructure – the focus of government attention – and private commercial development.

RICS said that significantly, despite the introduction of the Bank of England’s Funding for Lending Scheme, some 89% of surveyors believed that financial constraints were holding the industry back, with around two thirds citing insufficient demand. It added that it was not surprising that over half also claimed that weather conditions had hampered a recovery in the sector.

Elsewhere, input costs continue to climb with 15% more respondents reporting rises rather than falls. RICS pointed out that prices had now been moving upwards since the beginning of 2010 and had been significantly outpacing output costs for five years.

In England, London and the South East, as well as the North saw overall workloads rise by the biggest margin, while Northern Ireland and Scotland saw activity continue to drop by significant margins.

Simon Rubinsohn, RICS chief economist, said, “After a truly dreadful year, if one believes the official data, there are signs that 2013 will bring some better news for the construction sector.

“Most notably, the numerous measures that the government has introduced with a focus on infrastructure appear to be bearing some fruit.”

He went on to say, “Critically, competitive pressures in the sector remain intense which is continuing to erode profit margins. And for the time being, financing constraints are still an issue, although the Funding for Lending scheme should gradually help to ease this challenge.”

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