Private Housebuilding Rates at Lowest Level for Almost Three Years

Private housebuilding is rising at the lowest rate for almost three years, according to the UK Construction Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Although the Government has pledged to deliver 200,000 new homes by 2020, the RICS reports that growth in the private housing sector slowed down considerably over the first quarter (Q1) of this year.

During the first three months of the year, private housebuilding rose at the slowest pace since Q2 2013, with just 36% more of those working in the sector reporting a rise in growth rather than a fall. In Q1 2015, this figure was close to 50%.

Across all sectors, the survey shows that while 33% more respondents saw workloads increase rather than decline in the final quarter of 2015, this figure fell by 5% in Q1 2016.

Confidence in the future of housebuilding also dropped, with the amount of construction professionals expecting to see workloads rise over the next 12 months exceeding those predicting a fall by 55%. However, this time last year, a huge 79% more respondents expected to see workloads increase.

Meanwhile, following 4% employment growth in 2015, respondents expect headcounts to continue rising in the next year, with a net balance of 41% forecasting an average growth of 2%.

The Chief Economist at the RICS, Simon Rubinsohn, comments: “On the surface, it might seem surprising that we are witnessing a slowdown in the construction sector just a few months after hearing the Chancellor’s ‘We are the Builders’ speech, given the Government’s significant commitment to this sector.

“One might well ask why growth in private housing workloads is softening at a time when policy is firmly focused on the creation of new starter homes. We have long held the view that starter homes cannot be the only solution. There is an issue around the availability of land on which new houses can be built, and we would like to see more being done to free up private brownfield sites.”

He continues: “Our survey tells us that planning delays are one of the biggest barriers to growth in the construction sector. We have recommended that councils work together to create a team of emergency planners who can parachute into boroughs that are experiencing significant delays, therefore reducing a major growth barrier.

“That said, we cannot discount the climate of uncertainty caused by the forthcoming EU referendum. We know that a range of sectors have been affected by these issues, as investors look to delay any decisions until a final outcome has been determined, and construction is no exception.”

Indeed, it is expected that house prices and sales will fall as the EU referendum approaches.