Difficulty accessing credit puts fresh brake on growth

The Royal Institution of Chartered Surveyors latest construction and infrastructure survey found that while workloads are still rising, the rate of growth is starting to decline.

Expectations for the next 12 months are now worse than compared to three months ago amid growing concern about how macro factors may impact the industry, specifically with respect to credit constraints.

Simon Rubinsohn, chief economist at RICS, said: “The deteriorating macro environment is clearly taking a toll on the construction industry with access to credit now being cited as a key challenge for businesses alongside the more familiar issues around building materials and labour.

“Indeed, the RICS metric capturing the extent of skill shortages in the sector has barely budged in recent quarters with quantity surveyors and a range of skilled trades in particular short supply.

“Meanwhile, the impact of the shift in the economic outlook is most visible in the residential and commercial sectors where workloads are now viewed as likely to flatline over the coming year.

“Ongoing commitments to a number of big projects is, however, continuing to support activity in the infrastructure area.”

The headline reading of construction workload activity for the whole of the industry has lost momentum over the past quarter, with a net balance of +17% of respondents reporting an increase, compared to +30% in Q2.

The infrastructure sector is continuing to hold up better than other areas; with a net balance of +32% this quarter.

Business enquiries, for either new projects or contracts, have also eased compared to Q2 suggesting that the market is losing some steam.

In Q2 the net balance was at +36% while this quarter it has fallen to +15%.

updated: 03/11/2022