A poll of members in the construction industry by the Royal Institution of Chartered Surveyors shows that expectations of a cut in interest rates at some point in 2024 are sufficient grounds for optimism.
The RICS UK Construction Monitor Q4 2023 shows moderate growth in infrastructure workloads but house-building activity still in decline – both findings broadly consistent with other industry surveys and analysis.
But workload trends overall became less negative in the latest quarterly survey, with the headline figure now recording a -8% figure which is marginally stronger than the -10% recorded in Q3. Infrastructure reported a +9% growth reading; private housing workloads were down at -21%. Public housing deteriorated from -7% to -14% in a single quarter.
Looking forward over the next 12 months, the feedback from surveyors is a little more upbeat than in Q3, RICS reports, with the headline future workloads indicator climbing from +6% to +12%. However, as the graph below shows, 12 is still a very small number in this context.
RICS senior economist Tarrant Parsons said: “Although current conditions across the UK construction industry remain relatively subdued, the latest survey feedback shows a gradual improvement in forward-looking sentiment. Supported by the prospect of easing interest rates later this year, overall workloads are anticipated to rise, with respondents anticipating this pick-up will be accompanied by a rise in employment levels across the industry. That said, the challenge around existing skills shortages remains a persistent theme in the Q4 results.”
Peter Carruthers of Paragon Construction Consultants in Newcastle Upon Tyne, said: “With base rate rises easing, the prevailing mood is one of cautious optimism. However the persistently elevated cost of construction materials, components and labour continue to pose significant viability challenges.”