Scottish construction growth suffers as housebuilding drops

Miller Homes stockA drop in private and public housebuilding has contributed to a slowdown in Scottish the construction sector as a whole, according to new research published today.

The latest UK Construction Market Survey by the Royal Institution of Chartered Surveyors (RICS) reported that growth in construction work in Scotland stalled during the second quarter of this year for the first time since 2013, but continued in the rest of the UK. The study found that there was also a reduction in the private industrial sector during the three months to the end of June.

Summing up the situation in the construction market, the report stated: “The overall workloads indicator turned slightly negative in Scotland for the first time since Q1 2013.

“The slowdown was visible across most sectors with respondents only reporting modest growth in private commercial and infrastructure.”

It added: “Aside from Scotland, where activity has flat lined relative to Q1, respondents in all other parts of the UK continue to report a rise in workloads.”

Among those questioned across the UK for the survey, the responses for which were collected after the outcome of the EU referendum was known, more than two-thirds cited finance as the biggest constraint to growth. Planning and regulatory delays were also seen as a key issue by 60 per cent of respondents.

In Scotland, quantity surveyors were found to remain in particularly short supply, with 44 per cent of those questioned for the survey citing difficulties sourcing these skills.

RICS also recorded a “less optimistic outlook” for the sector over the year ahead, although across Scotland 21 per cent more contributors said they still expect activity to rise rather than fall over this period.

Neil Donald, of Neil Donald Ltd in Aberdeen, told the survey: “This slowdown has been coming for many months and the current political and economic uncertainty is clearly adding to this issue, but it is not the only factor in an economy still recovering from the last recession.”

Simon Rubinsohn
Simon Rubinsohn

RICS chief economist Simon Rubinsohn said moderation in the growth trend across the UK revealed by the survey was “not altogether surprising” given the build-up to the EU referendum.

He added: “Significantly, the biggest issue at the present time alongside uncertainty looks to be credit constraints.

“Encouragingly, the swift actions of the Bank of England in creating additional capacity for the banking sector to provide funding to meet demand should help alleviate some of this pressure.

“Nevertheless, anecdotal evidence does indicate that the challenge for the British government in establishing a new relationship with the EU could see some investment plans in the construction sector scaled back.”

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