UK construction to turn a corner in 2013

Published:  10 January, 2013

The UK construction market is expected to turn a corner this year, albeit only in first gear, with chartered surveyors predicting output to increase in 2013, says the latest RICS construction market survey.

Last quarter, 15 percent more surveyors across the country reported that they expect workloads to grow over the coming twelve months but this follows what was a horrendous year for the sector.

This upturn is reflected in the small increase in reported workloads in the final three months of 2012. Over this period, a net balance of six percent more respondents indicated that activity had increased, with the most substantial gains being seen in infrastructure - which has been the focus of so much government attention - and private commercial development.

Significantly, despite the introduction of the Funding for Lending Scheme, some 89 percent of surveyors believe that financial constraints are holding the industry back with around two thirds citing insufficient demand. Not surprisingly, over half also claim that weather conditions have hampered a recovery in the sector.

Elsewhere, input costs continue to climb with 15 percent more respondents reporting rises rather than falls. Prices have now been moving upwards since the beginning of 2010 and have been significantly outpacing output costs for five years.

Across the country, London and the South East and the North of England 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, commented: “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.

“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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