Construction continues to slow

The slowdown in the UK property market has prompted a sharp fall in construction, according to the Royal Institution of Charted Surveyors (Rics).

The Rics UK construction market survey finds just one per cent more surveyors are reporting an increase in workloads rather than a fall in the first quarter of 2008, when compared to the final quarter of 2007.

This is down from 16 per cent in the previous quarter, and represents the lowest level since quarter one of 1996 – during the last severe house price moderation.

The north, where workloads are now falling and the net balance is the lowest since quarter three of 1995, is by far the weakest. However, growth in the other regions remains positive, albeit at a slower pace.

"Growth in the construction industry has slowed abruptly in the first quarter of this year," said Rics senior economist, David Stubbs.

"Private residential workloads are now shrinking as home builders react to challenging conditions in the housing market by reducing the number of new homes under construction."

"This emphasizes the difficulty that the government will have in encouraging higher house building levels during periods when the housing market is soft."

Last year the government announced plans to build two million new homes by 2016, with a further one million, carbon-neutral properties completed by 2020.

However, this presently seems a largely optimistic forecast with construction growth on the wane.

Residential workloads in the private sector have turned negative for the first time since 1999; with nine per cent more chartered surveyors reporting a fall in workloads rather than a rise.

This is down from a positive figure of 16 per cent in the last quarter, with the fall due mainly to a downturn in the north.

However, private housing weakened in all regions and is now static in London and the south-east, Wales, the Midlands and Northern Ireland.

Expectations for profit margins fell for only the second time in the survey’s history with surveyor sentiment falling sharply as growth in the private commercial and private housing sectors slowed.

Equally, confidence that workloads will increase has fallen for the fifth consecutive quarter, falling below the survey’s long run average.