Housing workloads ‘keeping Scottish construction sector buoyant’



Workloads in the Scottish construction sector continue to rise amid financial constraints and Brexit uncertainties, assisted largely by the buoyant housing sector, surveyors have reported.

Results of the Q3 2018 UK Construction and Infrastructure Market Survey from the Royal Institution of Chartered Surveyors (RICS) revealed that 10% more chartered surveyors reported that their workloads in Scotland had risen rather than fallen (up from +7% in the first half).

Private housing workloads improved in Q3 with 27% more respondents reporting a rise rather than a fall, up from +17% in Q2. Meanwhile, the infrastructure sector in Scotland saw further decline, with a net balance of -15% more respondents reporting a drop in infrastructure activity over the last three months (down from -7 in Q2).

In addition to infrastructure, the private industrials category shifted negatively, with a net balance of -8% reporting a decline in workloads. This was teamed with private commercial sector remaining flat in Q2 2018.

Housing sector activity was strong, with respondents in Scotland reporting growth in private and public house building – with 27% and 18% reporting increased workloads respectively.

Despite the growth in recent workloads, financial constraints are reported by 75% of surveyors to be by far the most significant impediment to growth. Anecdotal evidence suggests the difficulties to accessing bank finance and credit, along with cash flow and liquidity challenges are the main reasons for hampering current growth throughout the UK.

The outlook for the economy as a whole has led to a reduced optimism for the construction sector over the year ahead, with respondents pointing to a softening in growth in Scotland. 17% more contributors expect activity to rise rather than fall, down from 39% in Q2, and a net balance of 22% foresee an increase in hiring. As the pace of growth has broadly moderated, since 2014, anecdotal evidence suggests that the uncertainty generated around Brexit, as the date to exit draws closer, is the main reason for the relatively cautious outlook.

Jeffrey Matsu, RICS senior economist, said: “While ongoing capacity constraints have supported steady workload activity, the outlook going forward is far from clear. Recent Brexit-related indecision has added considerably to this uncertainty, but whatever the outcome, the pace of growth is expected to decelerate if only due to cyclical market conditions.”

Tags: RICS



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