RICS predicts South West construction market to improve in 201310th January 2013

The South West 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 South West 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 stabilisation in reported workloads in the final three months of 2012. The most substantial gain was seen in infrastructure - which has been the focus of so much government attention – with seven percent more South West surveyors reporting rises rather than falls.

Significantly, despite the introduction of the Funding for Lending Scheme, some 94 percent of South West surveyors believe that financial constraints are holding the industry back with over two thirds citing insufficient demand. Not surprisingly, almost half also claim that weather conditions have hampered a recovery in the sector.

Elsewhere, input costs continue to climb with nine 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 some time.

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, said: “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.”