The latest RICS UK Construction Monitor, from Q4 2024, shows stable activity and expectations of a stronger next 12 months.
While headline workloads have turned slightly negative, there is a disparity between new workloads and repair and maintenance. With new workloads seeing a decline and the latter seeing a marginal lift.
Infrastructure remains strongest, (net balance of +12% - slightly below the +17% observed in Q3). Within infrastructure, the energy subsector has seen the strongest results, with rail the weakest. Interestingly, for private housing workloads, these declined, with the net balance falling into negative territory.
The economic backdrop was cited as a barrier, with sentiment towards financial constraints and credit conditions, declining. Notably, despite the easing in policy lending rates being projected for 2025, the sentiment surrounding sector specific credit conditions in the twelve months ahead has turned more pessimistic. 62% of respondents highlighted financial constraints this quarter, followed by planning and regulation- reinforcing the need for the recent policy announcements designed to address these issues.
Labour shortages also remain a significant concern, with 41% of participants citing they are encountering problems with hiring; a similar proportion drawing attention to difficulties in the recruitment of quantity surveyors. Anecdotal comments continue to mention the lack of incoming industry professionals to be a significant structural challenge. Alongside this, industry employment expectations over the coming year remain solid, returning a net balance of +18%, unchanged from Q3. The next 12 months, workload expectations remain upbeat, infrastructure is still anticipated to be the strongest performing sector.
RICS Chief Economist, Simon Rubinsohn, commented: “Although the overall tone of the latest RICS Construction Monitor is a little subdued, the more positive assessment of the outlook foreshadowed, at least in part, some of announcement’s the Chancellor made in her recent speech.
“That said, respondents to the survey continue to highlight just how important it is to follow through on the plans to address some of the barriers presented by the current planning regime. Moreover, contributors also once again raise the issue of capacity when it comes to delivering on the ambitious goals of the government. Labour shortages continue identified as a meaningful obstacle to getting Britain building.”
RICS President Justin Sullivan, commented: “Whilst the latest findings reveal that the market remains stable, albeit subdued, when looking to the future, workload expectations remain upbeat. Infrastructure is still anticipated to be the strongest performing sector, which has been the case for several quarters.
“Skills and labour shortages continue to undermine projects, causing delays and costs to overrun. There is a particular shortage of Quantity Surveyors. Addressing these shortages requires a strategic approach, investing in skills training, education and long-term workplace development. RICS is committed to assisting the UK Government close the skills gap, which among other important factors, is crucial for it realising its ambitious building targets”.
