Office contracts and housebuilding drive rise in construction activity

Construction activity in London and south-east appears stronger than elsewhere in the UK, according to the Royal Institution of Chartered Surveyors.

Its latest Construction Market Survey reveals that profit margins and employment expectations are higher in London and the south east, with 62% more respondents expecting to take on more people over the next 12 months and 58% anticipating higher profits.

In the whole of the UK, construction workloads rose in Q2 2015 with 44% more respondents reporting higher activity levels (up from 37% on the previous quarter), driven by office development and private house building.

The latest data shows that in the second quarter of 2015 workloads rose across all sectors and in each part of the UK. The RICS reports that 44% more respondents to its quarterly survey reported higher activity levels compared with 37% in the previous quarter.

It says this increase in demand was driven by office development and private house building. Over half (51% net balance) of respondents reported higher workloads in private housing and 58% in the private commercial sector, following a 22% rise in new orders compared with the first quarter of 2015.

But the body warns that financial constraints and issues with planning and regulation remain key barriers to growth in the sector. In addition, 40% of respondents reported shortages of materials, but this is an improvement on the 60% who were experiencing similar difficulties through most of 2014.

The RICS reports: "The upturn in workloads has led to a less competitive tendering environment, particularly across public sector projects, but a lack of accessible finance is now affecting a net balance of 58% of our members and while concern over labour shortages dipped slightly, the demand for cost and project management skills rose."

For more information, see Royal Institution of Chartered Surveyors news.

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