The South West’s building sites have become quieter as the construction industry grapples with the effects of the coronavirus pandemic and a shortage of materials, a new report reveals.
The RICS South West Construction and Infrastructure Survey for Q3 2020 shows that construction workloads fell during the past three months, with infrastructure and private sector commercial and industrial projects most affected.
But growth expected from upcoming public house-building and infrastructure projects buoy the sector’s chances of a recovery, the survey said.
While cross-sector workloads fell by a net balance of -7%, this is less than the previous fall of -37% in Q2. However, when compared with last year’s industry average of +14% it shows construction in the South West is far from full recovery.
Breaking down across each sector, workloads fell across the private commercial and private industrials categories with net balances of -36% and -29% respectively. Respondents also reported a fall in workloads for infrastructure and private industrial projects – but this is offset by net balance increases for private (+19%) and public housing (+10) projects.
Respondents said that financial constraints and shortages of materials, coupled with insufficient demand, were the main reasons given for the subdued activity.
Looking ahead, more respondents expect new growth in infrastructure and public housing projects, and private housing and other public works schemes are also expected to continue, rising in the coming year and offering the construction sector new hope as the South West recovers from Covid-19.
Anticipated changes to the planning system, an extension to Help to Buy as well as the stamp duty holiday look likely to support growth in construction activity, the RICS report said.
However, despite fewer respondents reporting a fall in the number of new business inquiries across the South West, profit margins are envisaged to decline over the course of the next 12 months with a net balance of -44% of respondents expecting a fall.
Simon Rubinsohn, RICS chief economist, said: “With a new lockdown now under way, these are clearly very challenging times for the South West economy.
“The Government’s commitment to delivering on its infrastructure programme provides a ray of light with the survey pointing towards a solid increase in workloads over the next 12 months which could play an important role in helping to drive a wider recovery in business activity.
“The private residential sector is also expected to see solid growth aided by the various policy initiatives that are still in play. However, commercial development is anticipated as being flatter in the face of the structural pressures facing both offices and retail.”
