UK DIY News

RICS Survey Shows Industry Predicting Rise In Residential Construction

Workloads remain unchanged from Q1 although increased activity is expected in coming months
Survey respondents identify a lack of surveyors as the most significant skills shortage in the UK
Respondents hopeful that Government planning announcements will see rise in residential workloads, with private residential and non-residential sectors expected to grow.

The latest RICS UK Construction Monitor (Q2 2024) shows that the construction industry has remained steady, mirroring last quarter's performance. While current workloads show little change, the future looks brighter, with expectations of increased activity. Respondents also seem hopeful that Government ambitions for housing will materialise, with private housing workloads expected to rise.

Overall activity in the construction industry has held firm in Q2, with a net balance reading of 0, the same as Q1. Although this doesn't reflect growth, it's a notable improvement from the negative figures seen throughout 2023.

Infrastructure remains the strongest sector, posting a net balance of +13 (slightly down from +17 in Q1). Within infrastructure, the energy sub-sector continues to excel, achieving a strong +35 net balance. In contrast, the rail sub-sector lags behind with a modest figure of +2.

Looking to the future, a net balance of +25 respondents are expecting increased workloads over the next year. Infrastructure is anticipated to drive growth, with a projected net balance of +34. Additionally, amid a backdrop of planning and housing announcements and positive action, private residential development is expected to pick up, showing the strongest outlook since early 2022 with a +25 net balance (currently at -2).

Current workloads for social housing have seen another slight decline from –2 in Q1 to –7, but this is expected to increase as part of the overall activity indicator improving, as respondents show confidence in the new governments plans for growth in this sector.

Financial constraints were deemed the largest barrier to industry growth, affecting +61 of respondents. Planning and regulatory issues followed closely, impacting +58 of businesses, showing the need for changes announced this week. Although labour shortages are not as severe as in previous quarters, they remain a significant concern for +45 of respondents, with 47% of respondents citing a lack of surveyors as the most prevalent skills gap in the UK.

RICS Chief Executive Officer, Justin Young, commented: “Addressing the critical skills shortages in the construction sector, particularly among surveyors, is imperative for meeting the housing and infrastructure targets announced this week.

“The announced skills task force needs to pinpoint current and future skills gaps, and we are ready to work alongside it to develop a comprehensive cross-industry strategy to tackle these issues, including support for up-skilling and education.”.

“RICS is currently working with MHCLG’s chief planner alongside other professional bodies to identify gaps in the built environment skills landscape and to map out pathways which aim to improve planning capacity and capability and to foster further collaboration across the wider sector.”

RICS Chief Economist, Simon Rubinsohn, commented: “The overall tone of the feedback received to the Q2 RICS Construction Monitor is still pretty flat, although the forward-looking indicators are a little brighter even in the area of residential development, possibly reflecting some of the ambitious talk from the new government about ‘getting Britain building’.

“However, there are some major challenges identified by respondents that need addressing to secure the more meaningful uplift in both housing and infrastructure that appears to now be the focus of policy. In particular, planning reform was very much front and centre in many of the remarks from a large number of contributors, and it will be interesting to see the impact in our figures of this weeks planning and housing announcements.

“Concerns around finance remain prevalent although there is a sense that credit conditions in the construction sector will gradually improve helped by the prospect of the Bank of England beginning to lower interest rates”.