What’s happening in the Construction Industry?

According to the latest Royal Institute of Chartered Surveyors Market survey “The impact of government spending cuts and continued concerns over access to finance saw sentiment in the construction industry turn increasingly negative during the third quarter of 2010”.

Apparently there wasn’t much activity during Quarter 3 2010, and there was “Insufficient funding for new developments and continued concerns over the economy were among the factors cited as affecting construction projects”.

Importantly for the residential market, one of the worst areas affected was public housing where the government announced a 50% cut in spending on affordable homes.  The survey concluded that “Northern Ireland recorded the largest deterioration in workloads, with the net balance at -63. Scotland also experienced sharp declines in workloads as did the South West and Wales”. 

Commenting, RICS Chief Economist Simon Rubinsohn said:"Government data shows the construction sector has rebounded more strongly than many anticipated but our latest survey casts considerable doubt on whether this improvement can be sustained. The collapse in public funding will inevitably have a major impact on the sector."

Kate Faulkner, Managing Director of Designs on Property thinks that this is bad news for the property industry. “If large construction projects are being cut, then it’s likely that residential cuts will follow. Indeed, studying the latest index from SmartNew Homes, we have already seen a decline in the number of new properties for sale since the summer, albeit there were more properties coming through in September.”

“As we are heading towards an uncertain 2011, with mostly spending cuts and job losses to look forward (albeit a small economic bounce courtesy of a Royal Wedding) it’s unlikely developers will rush to build properties for next year.” Says Kate. “And with the Coalition government halving the budget for affordable/social housing, it’s possible that we could build even fewer homes next year than we have in the last few disastrous years!”

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