South East: Construction picks up after EU referendum dip

South East expectations across the construction sector have now regained the ground lost post the EU vote, according to the latest Royal Institution of Chartered Surveyors (RICS) Construction Market Survey, Q4 2016.

Having recovered following a slight dip around the time of the EU referendum, expectations for output growth over the year to come in the South East strengthened further for the second consecutive report. Indeed, the twelve month workloads expectations series posted a reading of +80% (following +56% in Q3).

Alongside this, employment expectations softened in the region (but remain positive), with 24% more respondents anticipating a rise in construction sector employment over the year to come. It should be noted however that employment expectations for the next year are still below pre-referendum levels. 

The latest results point to a broadly flat trend in activity during the final quarter of 2016 in the South East, with only 3% more respondents reporting an increase/decrease in total workloads. The anecdotal comments left by chartered surveyors in the South East do continue to highlight uncertainty surrounding the departure from the EU to be dampening investment and activity.

Following the pattern of the last three quarters, the strongest quarterly rise in workloads was reported in the private housing sector in the region with 33% more respondents citing an increase workloads (rather than a decrease).

Over the next 12 months, respondents continue to expect the roads to be the fastest growing  infrastructure subsector across the region with 45% of respondents anticipating this area to see the strongest rise in output.

Skill shortages continue to be a key impediment to growth in the sector, although they have eased in five consecutive reports.  Interestingly however, the one area that remains a particular concern is the shortage of quantity surveyors with 66% of respondents in the region highlighting a gap.  This reported shortage has grown steadily, in the South East, since the end of 2012.

Jeremy Blackburn, RICS head of policy, said: “Many firms are currently having to bring construction professionals in from outside the UK.  The lack of quantity surveyors consistently apparent in our survey is also underscored by the fact that, at the moment, under the government’s Shortage Occupation List, it is easier to employ a ballet dancer than a quantity surveyor.

“Even if we were to reverse this and also ensure that through Brexit we maintain access to EU workforce, we would still have a domestic shortfall of skills. The Industrial Strategy is a golden opportunity to align education, training and employer work paths – along with modern methods of construction – to ensure we have the skilled workforce to meet our building targets.”